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September 25, 2020
Business Finance

Asian stocks slip as oil woes sap sentiment, euro stands tall

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By Shinichi Saoshiro

TOKYO (Reuters) – Asian stocks slipped on Wednesday after weaker crude oil prices took a toll on Wall Street, while the euro kept big gains after enjoying a boost from robust German economic growth.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.45 percent.

China’s Shanghai index was down 0.7 percent, Australian stocks dropped 0.3 percent and South Korea’s KOSPI shed 0.3 percent. Japan’s Nikkei lost 0.9 percent.

“The decline by U.S. equities led by energy shares is having a knock-on effect, dampening sentiment in sectors related to energy and industry,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“Broadly speaking equities had enjoyed an almost uninterrupted run for the past few months, so we are seeing a bit of a correction finally emerging.”

All three major U.S. stock indexes dipped on Tuesday as an extended drop in crude oil prices hit energy shares and as General Electric plunged for a second straight day. [.N]

The euro stood little changed at $1.1794 after rising 1.1 percent overnight to a 2-1/2-week high of $1.1805 as data showed Germany’s economy shifted into a higher gear in the third quarter.

Germany’s seasonally adjusted gross domestic product (GDP) rose by 0.8 percent on the quarter, compared with a Reuters poll forecast of 0.6 percent.

Pressured by the euro’s surge, the dollar index against a basket of six major currencies lost about 0.7 percent overnight. It last stood flat at 93.828..

The greenback was 0.25 percent lower at 113.180 yen after pulling back from a high of 113.910 the previous day.

The yen as well as Japan’s equity and bond markets showed little reaction to Wednesday’s GDP data. Japan’s economy grew for the seventh straight quarter during the July-September period, although this was tempered somewhat as private consumption declined for the first time since the last quarter of 2015.

The immediate focus for the dollar, and a potential catalyst, was data on U.S. consumer prices due later in the global day.

Financial markets, which are betting the Federal Reserve will hike interest rates in December, will be looking for clues to gauge how many more rate increases could be in store next year.

In commodities, crude oil prices stretched losses, weighed by forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency (IEA). [O/R]

U.S. crude futures were down 1.1 percent at $55.10 per barrel and on track for their fourth day of losses. Brent lost 1.2 percent to $61.48 per barrel.

With oil prices having slid steadily from 28-month highs scaled last week, commodity currencies came under pressure.

The Canadian dollar stood at C$1.2738 per dollar after weakening to a one-week low of C$1.2773 overnight.

The Australian dollar faced additional woes after Wednesday’s data showed the country’s wages did not rise as much as expected last quarter.

The Aussie fell more than 0.6 percent to a four-month trough of $0.7576.

(Reporting by Shinichi Saoshiro; Editing by Shri Navaratnam)
Copyright 2017 Thomson Reuters. Click for Restrictions.

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