TOKYO (Reuters) – Asian shares were led lower on Thursday as the Hong Kong market fell for the second consecutive session following each day of massive street protests, while oil prices flirted with 5-month lows due to higher U.S. crude inventories and a bleak demand outlook.
Hopes that the us and China can clinch a deal on the sidelines of a group of 20 summits in Osaka on June 28-29 are fading, also hurting sentiment and driving bond yields down.
Hong Kong leads Asian stocks lower:
“There’s not even a plan of ministerial-level bilateral meetings before the G20 summit. You can’t expect any major agreement,” said Hirokazu Kabeya, chief world strategist at Daiwa Securities.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell the maximum amount as 1 chronicle, as Hong Kong’s suspend Seng Index dropped 1.5% following Wednesday’s 1.7% fall.
The selling pressure in hong kong came once a mass demonstration against legislation that may allow citizens to be extradited to China triggered a mass protest and a few of the worst unrest seen within the territory since Britain handed it back to Chinese rule in 1997.
Japan’s Nikkei lost zero.8% while U.S. stock futures lost 0.3% in Asia, following little losses the previous day when the S&P 500 shed 0.20%.
Oil hovered near 5-month lows, pressured by another unexpected rise in U.S. crude stockpiles, similarly as the bleaker outlook for demand posed by prospects of a protracted trade war between China and the us.
Brent crude futures barely moved at $60.06 in early trade when a 3.7% slide on Wed to $59.97 a barrel, the international benchmark’s lowest close since Jan. 28.
U.S. West Texas Intermediate crude futures stood at $51.12 per barrel, compared to the previous day’s close of $50.72 a barrel, its weakest settlement since Jan. 14.
“It is a little bit of mystery that oil costs are so low once world stock costs stay relatively supported. but one factor is definite. Weaker oil costs can curb inflation and boost rate cut expectations,” said Daiwa’s Kabeya.
Government data showed on Wednesday U.S. consumer prices barely rose in could, with the core annual inflation retardation to a pair of.0%, compared to a peak of two.4% last July, adding to the growing expectations of a federal reserve rate cut in coming months.
Investors are looking to what Fed policymakers can say after its next policy meeting on June 18-19, with Fed Funds rate futures pricing in a 25-basis-point rate cut for the subsequent policy review on July 30-31.
The 10-year U.S. Treasuries yield swayback to a pair of.103 per cent, close to Friday’s 2.053 p.c, its lowest level since September 2017.
Bond yields fell in Asia. long Japanese government bond yields hit their lowest levels since August 2016, with the 20-year yield down 2.5 basis points at 0.220 per cent.
In Australia, long known for its high-yield currency, yields fell to record lows, with three-year yield now slithering below 1 per cent.
In the currency market, the yen gained 0.25% to 108.25 to the dollar as risk sentiment hard while the dollar born 0.2% to $0.6913.
The euro stood very little changed at $1.1293, having taken a hit on Wed after U.S. President Donald Trump said he was considering sanctions over Russia’s Nord Stream a pair of the gas pipeline project and warned European country against being dependent on Russia for energy.
The British pound is on the rear foot once British lawmakers defeated a shot led by the opposition party to try to block a no-deal Brexit by seizing management of the parliamentary agenda from the govt.
Sterling fetched $1.2688, not far from this week’s low of $1.2653.