Shares in Asia were broadly lower Thursday as a rise in U.S. crude-oil inventory and expanding production in Saudi Arabia sent oil prices lower.
Australia’s S&P/ASX 200 was trading down about 1%, while Singapore’s Straits Times Index fell 0.7% and South Korea’s Kospi lost 0.4%. Japanese markets were closed for a holiday.
West Texas Intermediate, the U.S. oil gauge, fell 2.5% Wednesday to $41.71 a barrel, after the Energy Information Administration said inventories of crude rose in the week ended Aug. 5, with the market expecting a drop. Brent crude was trading 0.4% lower in morning Asian trade Thursday.
Separately, Saudi Arabia, the world’s largest oil producer, expanded production. The move “suggests a pragmatic effort to maintain export revenues to pay the bills and a determination to maintain market share,” said Tim Evans, a Citi Futures analyst.
The oil news hit the value of oil-exporter Malaysia’s ringgit, with the currency 0.6% weaker against the U.S. dollar.
Shares of Hong Kong-listed Chinese oil firms were mixed, with PetroChina Co. trading 0.6% lower and China Petroleum & Chemical Corp., or Sinopec, trading 0.2% higher.
Among commodities-linked stocks in Australia, Rio Tinto Ltd. was last down 0.7%, while Fortescue Metals Group lost 1.1%.
In Australia, Telstra Corp. was trading 1.5% lower after it said it would spend three billion Australian dollars ($2.31 billion) upgrading its networks over the next three years. It plans to buy back A$1.5 billion of its shares, after net profit surged on its sale of a minority stake in Chinese online business Autohome.
Meanwhile, Samsung Electronics Co. was down 0.2% after saying it would buy Dacor Inc., a U.S. maker of luxury kitchen appliances, for an undisclosed sum.
The developments in oil markets overshadowed another rate cut in the region.
New Zealand’s central bank on Thursday cut the official interest rate by a quarter of a percentage point to a record low of 2.00%, indicating further reductions are likely to push consumer-price inflation higher and tame a strong New Zealand dollar.
“The market had already priced in a rate cut and there was sufficient speculation that a 50-basis-point cut was on the cards,” said Alex Furber, a senior client services executive at CMC Markets.
The smaller-than-expected cut pushed the New Zealand dollar 1.1% higher against the U.S. dollar in early Asian trade. The Kiwi has risen about 6% against the greenback so far this year.
Elsewhere, the Bank of Korea kept its base rate unchanged for a second straight month, as widely expected. The South Korean central bank held the benchmark seven-day repurchase rate steady at a record low 1.25% on Thursday.
“Better fundamental data is likely to have prompted the BOK to employ a wait-and-see approach,” said Dwyfor Evans, head of macro-strategy for Asia Pacific at State Street Global Markets.
Shanghai’s Composite Index was last up 0.1% after China’s banking regulator Wednesday cut its estimate of bad loans at commercial banks in the second quarter, recalculated from preliminary data it released last month.
In currencies, China’s central bank guided the yuan 0.42% stronger, its biggest appreciation margin since June.
The move comes a year after the yuan’s devaluation last August, when authorities fixed the currency 1.9% weaker, shocking investors and sending China equities into a tailspin.
Thursday’s yuan gain is supported by U.S. dollar weakening. The market is now pricing in just a 12% chance of a rate increase in September by the U.S. Federal Reserve, down from 15% earlier, according to Fed Fund futures price data from CME.
Australia’s S&P/ASX 200 was trading down about 1%, while Singapore’s Straits Times Index fell 0.7% and South Korea’s Kospi lost 0.4%.
West Texas Intermediate, the U.S. oil gauge, fell 2.5% Wednesday to $41.71 a barrel, after the Energy Information Administration said inventories of crude rose in the week ended Aug. 5, with the market expecting a drop. Brent crude was trading 0.4% lower in morning Asian trade Thursday.
Separately, Saudi Arabia, the world’s largest oil producer, expanded production. The move “suggests a pragmatic effort to maintain export revenues to pay the bills and a determination to maintain market share,” said Tim Evans, a Citi Futures analyst.
The oil news hit the value of oil-exporter Malaysia’s ringgit, with the currency 0.6% weaker against the U.S. dollar.
Shares of Hong Kong-listed Chinese oil firms were mixed, with PetroChina Co. trading 0.6% lower and China Petroleum & Chemical Corp., or Sinopec, trading 0.2% higher.
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