Japanese shares drove losses in Asia following the yen’s longest advance in almost a year, while U.S. oil topping $40 a barrel for the first time this month buoyed energy producers and high-yielding currencies.

The Topix index resumed declines in Tokyo, falling for the first time in three days as the yen held gains near its strongest level since October 2014. West Texas Intermediate crude oil built on Friday’s jump, underpinning gains in the Malaysian ringgit as a gauge of Asian energy shares climbed for a fourth straight day. Copper increased ahead of prices data out of China, the world’s biggest industrial metals consumer. Gold rose a third day.

Oil’s fortunes are having an impact beyond the commodity sector amid concern over the strength of the world economy and the impact of gyrating energy prices on inflation. Global equities are trading the most in sync with oil since June 2013, with major producers from Russia to Saudi Arabia set to meet April 17 to discuss a production freeze. Friday’s 6.6 percent bounce, WTI’s steepest since mid-February, was also fueled by an unexpected drop in U.S. stockpiles and a decline in the number of active rigs. Stocks globally fell last week amid concern over the potency of central bank stimulus efforts.

“Movements in oil prices seem to matter an awful lot for the direction and sentiment in financial markets at present,” Con Williams, an agricultural economist in Wellington at ANZ Bank New Zealand Ltd., said in a note to clients. “It seems to us the likelihood of any agreement being reached on April 17 to curb production is very low. This leaves a lot of event risk in oil markets, which could recoil quickly. What ultimately needs to be watched is the fundamentals, and in this regard they are slowly improving.”

Stocks

The MSCI Asia Pacific Index dropped 0.5 percent as of 9:16 a.m. Tokyo time, pulling back after last week’s 0.3 percent advance. Exporters and banks led the Topix down 1.3 percent, following two weeks of declines in the 1,935-stock Japanese measure. The Nikkei 225 Stock Average lost 1.1 percent.

In Australia, the S&P/ASX 200 Index fell 0.1 percent, even as mining and energy shares advanced, while the Kospi index in Seoul swung between gains and losses. New Zealand’s S&P/NZX 50 Index, the first major stock index to start trading each day in the Asia-Pacific region, was little changed.

Standard & Poor’s 500 Index futures dropped 0.1 percent early Monday, after the U.S. benchmark ended Friday up 0.3 percent, after coming close during the session to erasing the day’s gains. Commodity stocks led increases, with an S&P 500 sub-index of oil and gas companies climbing to its highest level since March 22.

Futures on Hong Kong’s Hang Seng Index were down 0.2 percent in trading at the end of last week, as contracts on the Hang Seng China Enterprises Index foreshadowed a drop of 0.3 percent. FTSE China A50 Index futures rose 0.1 percent.

As well as the Chinese reports on consumer and producer prices, Australia issues lending data Monday and Malaysian factory output is due, along with an update on Taiwanese trade.

Source:
courtesy of BLOOMBERG

by Emma O'Brien

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