Asian Shares Outside Japan Slip as Dollar Revival Weighs on Oil

(Bloomberg) -- Asian stocks outside of Japan retreated following a pullback in oil prices, as the dollar solidified its rebound amid a weaker euro.

Equities in Sydney and Seoul declined, while Tokyo shares fluctuated, following a drop in the S&P 500 Index amid mixed earnings results. The yen weakened for a second day as the greenback gained against New Zealand’s currency and its Asian emerging-market peers, while the euro lingered near its lowest point since June. U.S. crude was below $51 a barrel after sinking Thursday as Russia’s largest oil company said the nation could boost output.

Lackluster earnings forecasts from Nestle SA to EBay Inc. overshadowed any optimism from the better-than-expected projections of American Express Co. and Deutsche Lufthansa AG on Thursday. European Central Bank President Mario Draghi said policy makers haven’t discussed extending or tapering their stimulus efforts, on the same day as traders weighed commentary on the third and final U.S. presidential debate. Odds on the Federal Reserve raising rates by December have increased by about two percentage points over the past week, to 68 percent, according to Fed funds futures tracked by Bloomberg.

“There’s no shortage of things that will generate volatility,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “But unless something comes out of left field, the Fed will hike in December and that means the economy is on a solid footing and that’s positive.”

Markets in Hong Kong are closed for at least the morning on Friday as the outer bands of Typhoon Haima begin to lash the city. New Zealand issues data on credit-card spending, while China reports on property prices and commodity import data. Malaysia updates on consumer prices and also releases figures on foreign reserves, along with Thailand.

Stocks

The MSCI Asia Pacific excluding Japan Index fell 0.2 percent as of 9:25 a.m. Tokyo time, declining for a second session to trim its gain in the week to 0.9 percent.

Australia’s S&P/ASX 200 Index slipped at least 0.3 percent with the Kospi index in Seoul, and New Zealand’s S&P/NZX 50 Index also lost 0.3 percent, bringing its third weekly retreat to 2.5 percent.

In Japan, the Topix index lost less than 0.1 percent, while the Nikkei 225 Stock Average gained 0.1 percent, rising for a sixth straight day.

While markets in Hong Kong are likely to be suspended, futures on the city’s Hang Seng and Hang Seng China Enterprises Index slipped 0.2 percent in most recent trading. FTSE China A50 Index contracts gained 0.1 percent. Futures on the S&P 500 Index were down 0.2 percent to 2,135 after the underlying benchmark retreated 0.1 percent on Thursday.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, added 0.1 percent early Friday after rallying 0.5 percent last session. The index is still on track for a weekly decline of 0.1 percent, its first this month.

The Aussie traded at 76.32 U.S. cents after sliding 1.2 percent Thursday, the most among major currencies. The Korean won and Thai baht dropped at least 0.2 percent.

The euro was steady at $1.0924, poised for a 0.4 percent drop in the week after losing as much as 0.5 percent last session.

“I don’t think euro-dollar has much upside,” said Alessio de Longis, a New York-based money manager in OppenheimerFunds Inc.’s global multi asset group. “We’ve been underweight all year” on the euro, and Draghi’s comments haven’t changed that position, he said.

The ECB chief said Thursday that officials didn’t talk about extending or tapering the institution’s 1.7 trillion-euro ($1.9 trillion) quantitative-easing program. That leaves traders waiting until at least December for news about policy changes.

Commodities

West Texas Intermediate crude futures edged down another 0.1 percent to $50.56 a barrel, after sliding 2.3 percent on Thursday.

Rosneft PJSC Chief Executive Officer Igor Sechin said Russia is capable of a substantial boost to production less than two weeks after President Vladimir Putin pledged his support for international efforts to limit output. Nigeria also said Thursday that it cut the price of every type of crude it sells in an effort to boost its global oil market share.

To contact the reporters on this story: Emma O'Brien in Wellington at eobrien6@bloomberg.net, Adam Haigh in Sydney at ahaigh1@bloomberg.net. To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net, Andreea Papuc

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