Asian shares fall after weak quarterly retail reports sink Wall Street

An investor drinks tea in front of a screen showing stock market movements at a securities firm in Fuyang, China.
An investor drinks tea in front of a screen showing stock market movements at a securities firm in Fuyang, China. PHOTO: AFP

TOKYO (REUTERS) - Asian shares fell on Thursday (May 12) following a dismal day on Wall Street, while crude oil futures gave back some of their overnight gains after jumping on an unexpected fall in US crude inventories.

The MSCI Asia Pacific Index slipped 0.5 per cent to 127.16 as of 9:09 am in Tokyo, in the wake of the worst day for US share markets since February, as disappointing results from Walt Disney Co to Macy's raised doubts about the strength of the American consumer.

All of the 10 major S&P 500 sectors fell except for utilities, which gained 0.24 per cent.

In Asia, Japan's Nikkei stock index skidded 0.9 per cent. South Korea's Kospi index lost 0.42 per cent while Australia's S&P/ASX 200 Index fell 0.45 per cent.

Crude oil futures were lower in Asian trading after getting a lift when the US government unexpectedly said crude inventories fell for the first time since March.

US crude slipped 0.8 per cent to US$45.85 per barrel after adding 3.5 per cent on Wednesday. Brent crude shed 0.8 per cent to US$47.22 after settling up 4.6 per cent overnight and gaining 4.3 per cent in the previous session.

"At this point, investors see oil extending its rally as a sign of improvement in global growth," said Jennifer Vail, head of fixed-income research at US Bank Wealth Management.

But the weak retail reports offset any lift in sentiment, she said. In light of the murky economic outlook, US Federal Reserve policymakers remain concerned about whether the market could stomach another interest rate hike.

"They (the Fed) really want to raise the policy rate so that they have some flexibility should the domestic economy need it, but given this highly unusual slow-growth environment, it's been difficult for there to be clear signals that it can digest policy normalization," Ms Vail said.

Wall Street's top banks now see the US central bank's next hike coming in September, according to a Reuters survey conducted on Friday after a weaker-than-expected rise in US payrolls.

Later on Thursday, the Bank of England is expected to say that its nine Monetary Policy Committee members voted to keep rates on hold at a record low of 0.5 per cent, where they have remained for more than seven years.

BOE Governor Mark Carney will tread carefully back into Britain's debate on whether to leave the European Union, when he sets out the central bank's latest forecasts.

The dollar index, which tracks the greenback against a basket of six other currencies, was steady at 93.836, but remained below a two-week high of 94.356 set on Wednesday as investors took profits on the US currency's recent gains.

The euro was steady at US$1.1426, while the dollar edged down 0.1 per cent to 108.30 yen. It had notched a two-week high of 109.37 yen on Wednesday.