Azernews.Az

By Bloomberg

Oil rose following its steepest retreat in two months after U.S. crude inventories jumped to a record, fueling concern over a glut in the commodity. Most Asian stocks retreated, while the Korean won weakened before a rate review.

West Texas Intermediate crude added 1 percent to $50.92 a barrel by 9:47 a.m. in Tokyo, after tumbling 6.6 percent Wednesday. The MSCI Asia Pacific Index lost 0.1 percent, while Japan’s Nikkei 225 Stock Average rose 0.6 percent. Hong Kong index futures surged in recent trading. Standard & Poor’s 500 Index contracts were little changed after a 0.3 percent increase in the equity measure. The won dropped a third day.

Oil stockpiles expanded the most in 14 years last week, to the highest level since 1930, government data showed on Wednesday. U.S. shares advanced amid signs Federal Reserve officials were split on whether the economy is strong enough to withstand higher interest rates as soon as June. Minutes of the central bank’s March meeting showed some policy makers argued lower oil and a stronger dollar could damp inflation.

“We’re awash with oil,” Michael McCarthy, chief markets strategist in Sydney at CMC Markets, said by phone. “Despite evidence the previous week that the pulling of rigs from fields was having an affect on production, it appears that was only temporary.”

WTI climbed to its highest level this year before Wednesday’s retreat, which marked the biggest one-day drop since Feb. 4. Crude is down more than 50 percent since June after the U.S. shale boom added to global supplies, while OPEC members refused to reduce output.

Japan Stocks

Saudi Arabia increased oil production in March to the highest level in at least 12 years, while the U.S. Energy Information Administration said Tuesday that crude prices could tumble $15 a barrel next year if sanctions are lifted following a final deal with Iran on its nuclear program. Rigs targeting crude in the U.S. fell by 11 to 802, the smallest decline since December, Baker Hughes Inc. said on its website April 2.

In Japan, the Nikkei 225 extended gains at its highest level since 2000, while the broader Topix index added 0.2 percent. Fast Retailing Co., the Nikkei 225’s biggest-weighted equity, reports earnings Thursday, and Japan posts data on machinery tool orders.

Australia’s S&P/ASX 200 Index and the Kospi index in Seoul were little changed, while New Zealand’s NZX 50 Index fell 0.2 percent.

Hong Kong

Futures on Hong Kong’s Hang Seng Index jumped 2.1 percent in recent trading, as contracts on the Hang Seng China Enterprises Index, which tracks mainland Chinese stocks listed in the city, advanced 2.2 percent. Both indexes gained at last 3.8 percent Wednesday as purchases of Hong Kong-traded shares through the city’s mainland exchange link met their full quota for the first time, driving turnover to a record.

FTSE China A50 Index futures added 0.4 percent in Singapore, with the Shanghai Composite Index up 0.8 percent Wednesday to its highest level since March 2008. The Bloomberg China-US Equity Index, a gauge of the most-traded Chinese equities in New York, surged 4.9 percent, the most since November 2011.

“We’ve got the domestic liquidity from China making a statement that the Chinese economy is doing fine and shares are undervalued in Hong Kong,” Ng Soo Nam, Singapore-based head of Asian equities at Columbia Threadneedle, which manages about $506 billion globally, said Wednesday. “Liquidity can now move between the two markets as there are fewer restrictions.”

China reports on consumer prices Friday.

Alcoa Retreats

Alcoa Inc., the largest U.S. aluminum producer, slipped about 3 percent in after-hours trading after reporting sales that trailed analysts’ estimates. The company, which unofficially kicks off the U.S. earnings season, also changed its view on global aluminum supplies, indicating it expects a surplus in the industrial metal in 2015, after earlier predicting a deficit. While revenue lagged behind projections, Alcoa’s first-quarter profit beat analysts estimates.

Concern that tumbling oil prices and gains in the dollar will hurt profits has weighed on American equities. Profits for S&P 500 companies probably fell 5.8 percent in the first three months of the year, according to analysts’ estimates compiled by Bloomberg. Earnings are also projected to slump in the next two quarters. JPMorgan Chase & Co. and Intel Corp. are among companies scheduled to report earnings over the next seven days.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, added 0.2 percent. The gauge sank 0.7 percent April 3 after the weaker-than-forecast jobs report fueled the case for keeping key rates near zero.

Korea Rates

The won lost 0.4 percent to 1,095.50 a dollar. The Bank of Korea will keep its seven-day repurchase rate at 1.75 percent Thursday, after a surprise reduction last month, according to the median of 16 economists’ estimates compiled by Bloomberg News. The Malaysian ringgit also weakened, losing 0.2 percent to 3.6390 per dollar. The yen dropped 0.2 percent to 120.32 a dollar.

While several officials said the economic data and outlook probably warranted higher rates in June, other Fed policy makers argued that lower energy prices and dollar strength would damp inflation, delaying the need for rate increases. A couple said that the economy wouldn’t be ready for tighter policy until next year.

Fed Details

The Fed minutes of a meeting held before recent disappointing payroll figures added to conflicting data that have called into question whether the U.S. recovery is strong enough to justify higher rates. U.S. equities rallied March 18 after the Fed said growth has moderated and officials indicated borrowing costs will rise more slowly than previously estimated.

Policy makers dropped an assurance to be “patient” in a statement following the March meeting. While Chair Janet Yellen has laid the groundwork for an increase this year, officials recently have hinted at putting off raising for the next two meetings while keeping a “shallow” pace once they start.

Fed governor Jerome Powell said Wednesday that he saw a greater risk of damaging the economy with a premature rate increase than of triggering inflation by waiting too long. New York Fed President William Dudley said that while recent data has surprised on the downside, he can imagine scenarios in which policy makers raise borrowing costs at the June meeting.

Futures on the Fed funds rate put the odds of a rate hike in September at 30.7 percent Wednesday, up from 29.8 percent on Tuesday, according to data compiled by Bloomberg.

Copper, Gold

One-month non-deliverable forwards on the Indian rupee gained 0.2 percent in early Thursday trading to 62.48 per dollar. Moody’s Investors Service raised the outlook on the country’s Baa3 credit rating to positive from stable Thursday.

In the metals market, copper for three-month delivery on the London Metal Exchange declined 0.2 percent in a second day of losses, while nickel added 0.2 percent. Zinc fell for the first time in five days, losing 0.4 percent.

Gold for immediate delivery was little changed at $1,201.38 an ounce after slipping 0.6 percent Wednesday, the biggest one- day loss since March 30. Gold was steady last quarter as investors tried to gauge when the Fed would start raising borrowing costs.