TOKYO: Asian stocks have advanced as oil prices inched up after hitting a 10-month low on concerns over a supply glut and falling demand, dragging US and European shares lower. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.2 per cent on Thursday. Japan’s Nikkei and South Korea’s KOSPI were flat, while Australian shares rose0.4 per cent. Crude oil crept up from multi-month lows hit on Wednesday on concerns over growing US production and reduced Chinese refinery activity. “The time for contrarian trades in oil is fast approaching but I would want to see some stability in price and the technicals start to become more convincing,” said Chris Weston, chief market strategist at IG in Melbourne.
US crude futures rose 0.3 per cent or 13 cents to $US42.66 a barrel. They closed down 1.6 per cent on Wednesday after touching their lowest level since August. Global benchmark Brent climbed 0.2 per cent or one cent to $US44.92. It closed down 2.6 per cent on Wednesday after touching a seven-month low. The resulting decline in oil stocks hit stocks in Europe and on Wall Street overnight. Britain’s FTSE, Germany’s DAX and France’s CAC 40 closed between 0.3 per cent and 0.4 per cent lower. The Dow Jones Industrial Average closed down 0.3 per cent, while the S&P 500 was slightly lower. Nasdaq closed up 0.7 per cent, lifted by biotech stocks.
Financial stocks also contributed to losses on Wall Street, driven lower by a drop in the Treasury yield curve to its flattest in almost a decade as investors tried to reconcile a hawkish Federal Reserve with deteriorating inflation measures. Boston Fed President Eric Rosengren and Fed vice-chairman Stanley Fischer suggested they are concerned less about raising rates too fast or too high than about keeping them too low for too long. The yield curve between five-year notes and 30-year bonds flattened to as low as 95.20 basis points, the narrowest since December 2007, on Wednesday and again early on Thursday. The US dollar was marginally lower on Thursday. The dollar index was at 97.523 following Wednesday’s 0.2 per cent loss. The greenback bought 111.41 yen. Sterling retained Wednesday’s 0.3 per cent gain to trade at $US1.268 early on Thursday after the Bank of England’s chief economist said he was likely to vote for an interest rate hike this year. Until now, he has been seen as largely supportive of keeping rates low. The euro was flat at $US1.117, holding on to Wednesday’s 0.3 per cent gain. Spot gold rose 0.3 per cent to $US1,250.06 an ounce.
