Asian Energy Stocks Rise With Crude Oil as Japanese Shares Slip

  • Yen surges to highest level in 1 1/2 years, Nikkei declines
  • Shanghai Composite Index Halts Four-Day Winning Streak

Seeing Value in Emerging Markets

Asian energy stocks advanced as crude oil futures rallied, while a stronger yen weighed on Japanese shares.

The MSCI Asia Pacific Index was little changed at 124.44 as of 4:01 p.m. in Hong Kong, having swung between losses of 0.5 percent and gains of 0.3 percent. Japan’s Nikkei 225 Stock Average fell for a seventh day, its longest such streak since Prime Minister Shinzo Abe took power in 2012, after the yen surged to its highest level against the dollar in 1 1/2 years. After a rally in risk assets since mid-February, investors are turning cautious, with International Monetary Fund chief Christine Lagarde highlighting greater risks to global growth.

“In an environment where global growth is in question, it’s no surprise that we might see some market weakness,” Martin Lakos, a Sydney-based strategist at Macquarie Private Wealth, said by phone. “There’s enough in front of us for the markets to get nervous about. We see that growth is below par but we’re not seeing recession around the corner. Central banks are working very hard to support growth.”

Japan’s benchmark Nikkei 225 slipped 0.1 percent, as did the broader Topix index. The yen traded at 110.40 per dollar after briefly strengthening past 110 on Tuesday, undoing most of the weakness since the Bank of Japan expanded monetary easing in October 2014.

Turning Risk-Off

“It is still difficult to buy stocks because of the yen. There are hardly any positive factors for stocks,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “Investors are concerned about the global economy again and are turning to risk-off as the IMF may downgrade its growth forecasts.”

China’s Shanghai Composite Index lost 0.1 percent after the benchmark index hit a three-month high on Tuesday. Data released on Wednesday by Caixin Media and Markit Economics showed their services purchasing managers’ index increased to 52.2 in March. An official factory gauge last week showed improving conditions for the first time in eight months, while industrial profits halted a seven-month losing streak.

Taiwan’s Taiex index declined 1.7 percent as it resumed trading following two days of public holidays. South Korea’s Kospi index and Australia’s S&P/ASX 200 Index both climbed 0.4 percent. New Zealand’s S&P/NZX 50 Index rose 0.3 percent. Hong Kong’s Hang Seng Index and Singapore’s Straits Times Index added 0.2 percent.

Nuclear Reactors

Santos Ltd. climbed 3.9 percent in Sydney, pacing gains among energy producers as crude oil rallied for a second day. Kyushu Electric Power Co. jumped 7.2 percent in Tokyo after a Japanese court rejected a residents’ appeal that may have forced the utility to shut its two Sendai nuclear reactors. Hermes Microvision Inc. slumped 8.7 percent in Taipei after JPMorgan Chase & Co. downgraded the maker of semiconductor inspection equipment to underweight.

E-mini futures on the S&P 500 Index rose 0.3 percent. The underlying U.S. equity benchmark index slipped 1 percent on Tuesday. The rally that lifted the S&P 500 as much as 13 percent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. The U.S. central bank releases the minutes from its latest meeting on Wednesday.

U.S. crude solidified its rebound, climbing a second day after Kuwait said a deal to freeze output can be reached without Iran and U.S. industry data showed crude stockpiles declined. Contracts for May delivery climbed as much as 2.9 percent on Wednesday.

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