By Lisa Twaronite
TOKYO (Reuters) – Asian shares fell on Thursday following a dismal day on Wall Street, while the dollar took a breather from this week’s rebound and crude oil gave back some of its recent gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, moving back towards a two-month low touched on Tuesday, after U.S. share markets suffered their worst day since February following downbeat quarterly retail reports.
All of the 10 major S&P 500 (.SPX) sectors fell except for utilities (.SPLRCU), which gained 0.24 percent.
Japan’s Nikkei stock index (.N225) skidded 0.2 percent, falling for the first time in four days as investors digested dismal company earnings forecasts following a period of sustained yen strength, which cuts deeply into exporters’ profit outlooks.
“We’re beginning to see that guidance from exporters have been on many occasions quite shocking, forecasting in some cases declines in profit of 20 to 50 percent in the coming year,” said Stefan Worrall, director of Japan equity sales at Credit Suisse.
Crude oil futures were off lows but still down in Asian trading, after getting a lift overnight when the U.S. government unexpectedly said crude inventories fell for the first time since March. [O/R]
U.S. crude (CLc1) slipped 0.4 percent to $ 46.05 per barrel after adding 3.5 percent on Wednesday. Brent crude (LCOc1) shed 0.4 percent to $ 47.42 after settling up 4.6 percent overnight and gaining 4.3 percent in the previous session.
“At this point, investors see oil extending its rally as a sign of improvement in global growth,” said Jennifer Vail, head of fixed-income research at U.S. Bank Wealth Management in Portland, Oregon.
But the weak retail reports offset any lift in sentiment, she said. In light of the murky economic outlook, U.S. Federal Reserve policymakers remain concerned about whether the market could stomach another interest rate hike.
“They (the Fed) really want to raise the policy rate so that they have some flexibility should the domestic economy need it, but given this highly unusual slow-growth environment, it’s been difficult for there to be clear signals that it can digest policy normalisation,” Vail said.
Wall Street’s top banks now see the U.S. central bank’s next hike coming in September, according to a Reuters survey conducted on Friday after a weaker-than-expected rise in U.S. payrolls.
Later on Thursday, the Bank of England is expected to say that its nine Monetary Policy Committee members voted to keep rates on hold at a record low of 0.5 percent, where they have remained for more than seven years.
BOE Governor Mark Carney will tread carefully back into Britain’s debate on whether to leave the European Union, when he sets out the central bank’s latest forecasts.
The dollar index (.DXY), which tracks the greenback against a basket of six other currencies, edged up 0.1 percent to 93.882, but remained shy of a two-week high of 94.356 set on Wednesday after investors took profits on the U.S. currency’s recent gains.
The euro was steady at $ 1.1423 (EUR=), while the dollar added 0.3 percent to 108.67 yen (JPY=). It had notched a two-week high of 109.37 yen on Wednesday.
(Additional reporting by Joshua Hunt in Tokyo; Editing by Eric Meijer and Jacqueline Wong)
