Asian Futures Tip Mixed Day as Oil Attempts Rebound Before Talks

(Bloomberg) -- Asian index futures diverged, with contracts on Australian stocks falling while those in Japan rose as the optimism that followed last week’s central bank decisions was tempered. Oil rose.

Stocks in New Zealand kicked off the week with declines, falling for a second session as futures on South Korean shares also foreshadowed losses. Oil tried to rebound after sliding the most in two months, amid indications Saudi Arabia may agree to cut output to January levels at this week’s much-anticipated producer talks in Algiers. Gold and copper held onto last week’s gains. Turkey’s lira extended losses, dropping to its weakest level since the start of August, after Moody’s Investors Service cut the nation’s credit rating to junk.

Concern over the strength of the global recovery damped enthusiasm at the end of last week, which saw central banks from Indonesia to Japan and the Federal Reserve largely stick with loose monetary policy stances. Fed rhetoric Friday also muddied the waters, with Dallas Fed President Robert Kaplan saying the monetary authority “can afford to be patient in removing accommodation,” while his counterpart in Boston, Eric Rosengren, said failure to get back to a strategy of gradual interest-rate increases may threaten the economic rebound. OPEC members and other producers meet in the Algerian capital on Wednesday.

“The monetary authorities balked and gave the markets what they wanted and all of a sudden it’s a case of happy investors again,” Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd., which manages about $21 billion, said in an e-mail to clients. “The Bank of Japan has lost control of the yen. The only hope for Japan and the yen may be an aggressive Fed, but this is looking next to impossible despite an apparent split in the Fed Open Market Committee.”

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Thailand issues data on trade Monday, while Singapore reports on industrial output. BOJ Governor Haruhiko Kuroda will speak in Osaka, after the central bank tweaked its approach to stimulus last week, switching focus away from expanding monetary supply to controlling interest rates.

Stocks

New Zealand’s S&P/NZX 50 Index, the first major equity gauge to start trading, fell 0.4 percent as of 8:55 a.m. Tokyo time.

Futures on the S&P 500 Index were little changed, however, following a 0.6 percent drop in the underlying benchmark last session. Apple Inc. fell 1.7 percent on Friday, bringing its decline in the week to 1.9 percent. Shares of the iPhone maker jumped 11 percent in the previous week. Energy stocks slid 1.3 percent on Friday as West Texas Intermediate crude sank 4 percent amid speculation the Saudis had dismissed prospects of a deal aimed at stabilizing the market.

Yen-denominated futures on Japan’s Nikkei 225 Stock Average dropped 0.2 percent to 16,555 in Chicago, while contracts on the Osaka pre-market were bid up 0.1 percent to 16,590. The yen, which typically moves in the opposite direction to Japanese shares, gained 0.2 percent to 100.86 per dollar following a two-day decline of 0.7 percent.

In Australia, futures on the S&P/ASX 200 Index lost 0.5 percent in most recent trade, while those on the Kospi index in Seoul were down 0.3 percent. In Hong Kong, Hang Seng Index futures added 0.1 percent as contracts on the Hang Seng China Enterprises Index closed little changed. FTSE China A50 Index futures also rose 0.1 percent.

Currencies

The lira retreated 0.7 percent versus the dollar and 0.8 percent against the euro after Moody’s cut Turkey’s sovereign rating to Ba1 from Baa3, citing risks related to the country’s external financing needs and a weakening of credit fundamentals. The decision marked the end of a review following the unsuccessful coup attempt in July.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, dropped 0.1 percent early Monday, following last week’s 0.6 percent decline. Odds on the Fed raising rates this year are steady at 55 percent, from about the same level a week ago.

New Zealand’s dollar was near its weakest level this month after data showed a widening of the country’s trade deficit in August. Australia’s dollar also retreated, losing 0.1 percent in a second retreating day.

Bonds

Australian government debt rose for a third straight session, with yields on notes due in a decade down three basis points, or 0.03 percentage point, to 1.97 percent, their lowest level in two weeks.

Rates on similar maturity New Zealand bonds fell one basis point to 2.39 percent, retreating for a fourth day. Ten-year Treasuries were little changed on Friday, yielding 1.62 percent. U.S. yields fell seven basis points in the week after the Fed refrained from hiking rates.

Commodities

WTI added 0.9 percent to $44.90 a barrel, rising for the fifth time in six sessions. Brent was up 0.9 percent as well, to $46.31 after sliding 3.7 percent on Friday.

Saudi Arabia, the world’s No. 1 oil exporter, has offered to cut crude production to January levels, Algerian Energy Minister Noureddine Boutarfa said ahead of Wednesday’s meeting. “Saudi Arabia is ready to freeze production at the January level,” Boutarfa said, calling the offer “an interesting step.” The Saudis pumped a record 10.69 million barrels a day in August compared with 10.2 million in January, data compiled by Bloomberg show. Algeria wants the group to cut its collective output by 1 million barrels a day, Boutarfa said.

Copper futures due in December added 0.1 percent to $2.2035 a pound on the Comex, climbing for a third straight day, while gold for immediate delivery gained the same amount to $1,338.66 an ounce, following last week’s 2.1 percent advance, the most since the end of July.

To contact the reporter on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net. To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net, Andreea Papuc

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