Asian shares fell on Thursday, reversing recent gains as investors took profits after Wall Street declined overnight, and oil prices tumbled on news of a surprising jump in U.S. government stockpiles.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2 percent in early Asian trade. It hit a one-year high on Wednesday and has broadly outperformed the MSCI world index since end-June.
New Zealand shares were among the early winners in Asia after the central bank cut interest rates as widely expected.
Japan’s markets are closed for a holiday.
The surprising jump in US government oil stockpiles weighed on the S&P 500 and Dow Jones indices, which closed 0.29 percent and 0.20 percent down respectively.
The energy sector was among the worst-performing of the 10 major S&P groups, falling 1.4 percent after data from the U.S. Energy Information Administration (EIA) showed U.S. crude inventories rose 1.1 million barrels in the weekend of Aug. 5, a third consecutive weekly rise that surprised the market.
A weakening stock market and strong demand for government debt at bond auctions pushed yields down further.
The yield on the benchmark 10-year Treasury note extended a recent drop to fall to 1.508 percent while the yield on 10-year UK gilts tumbled to a record low of 0.52 percent.
The fall in gilt yield came after the Bank of England said it would buy the 52 million pound (US$67.5 million) remainder of Tuesday’s reverse auction shortfall in the second half of its bond-buying program.
In Asia, yields on 10-year benchmark New Zealand bonds fell to 2.18 percent after the Reserve Bank of New Zealand cut its official cash rate by 25 basis points to a record low of 2.0 percent as widely expected.
In currency markets, the dollar was broadly flat against a basket of currencies, nursing recent losses sustained in the wake of Friday’s strong U.S. jobs report.
More clarity about the U.S. economy’s health and the Federal Reserve’s next move on interest rates could come with Friday’s release of July retail sales and a speech by Janet Yellen, the chair of the U.S. central bank, later this month.
U.S. West Texas Intermediate crude eased 0.6 percent lower to $41.46 per barrel after sustaining sharp losses overnight. Brent crude fell half a percent to $43.82 per barrel.
Gold firmed slightly to $1346.60 per ounce after posting overnight gains.