TOKYO: Asian stocks fell, Japanese yen strengthened, and the dollar destabilized after oil’s destruction caused the biggest loss for US stocks since October and sent shareholders towards Treasuries and the yen.
The Topix index retreated 1.5 per cent by 9.11am in Tokyo, while Australia’s S&P/ASX 200 Index dropped 1.1 per cent. Futures on the Standard & Poor’s 500 Index slipped 0.1 per cent after the US measure tumbled 1.6 per cent. The yen climbed 0.3 per cent, extending its biggest surge in 18 months, while the euro and gold added 0.4 per cent. West Texas Intermediate crude climbed 0.5 per cent after a 4.5 per cent plunge.
The yield on 10-year Treasury notes dropped five basis points to 2.17 per cent yesterday as the lowest oil prices in five years spurred a selloff from stocks to metals and corporate debt. OPEC cut the forecast for how much crude it will need to provide in 2015 to the lowest level in 12 years and US crude inventories rose to the highest seasonal level in weekly data that started in 1982, the Energy Information Administration said. The oil rout is feeding concerns about deflation from Tokyo to Beijing and Brussels amid weakening global growth.
“Given how high the market was and now you have a combination of worries about oil and what’s happening in Greece, this is likely to be just a profit-taking market,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which oversees more than US$127 billion (RM439.4 billion). In the longer-term, “you should see falling inflation expectations, and at the end of the day, it should have a stimulatory effect globally. Next year is likely to be far more volatile than 2014.”
