SINGAPORE (BLOOMBERG) - US index futures declined after a rally in Asian stocks reversed on Thursday (Jan 21), pushing a gauge of global equities back to the brink of a bear market. Oil fell and the yen strengthened.
Benchmark share measures in Tokyo, Shanghai and Manila slumped at least 2.8 per cent, while Standard & Poor's 500 Index contracts erased early gains to trade 0.9 per cent lower. European index futures slid after the region's stocks plunged the most since August on Wednesday. China's equities fell despite a drop in money-market rates as the People's Bank of China injected the most cash via open-market operations since 2013. The yen approached a one-year high reached Wednesday. Copper pared an advance.
China's Shanghai Composite Index fell 3.2 per cent as the central bank's biggest cash injection in the financial system in three years failed to ease concern that the economic slowdown will deepen. In Hong Kong, the Hang Seng Index lost 1.4 per cent and the Hang Seng China Enterprises Index, a gauge of mainland Chinese shares listed in the city, dropped 1.8 per cent.
The MSCI Asia Pacific Index slid 1.6 per cent, after rallying as much as 1 per cent from its lowest level since September 2012. MSCI Inc.'s gauge of global equities fell 19.5 per cent below its May record. Japan's Topix index reversed a gain of 1.6 per cent to tumble 2.8 per cent.
The Straits Times Index also reversed from an early rebound to trade down 0.69 per cent at 2,542.01 as of 4:25 pm.
Volatility has coursed through financial markets in 2016, amid turmoil in Chinesemarkets and the almost uninterrupted selloff in crude oil. The S&P 500's plunge on Wednesday triggered a technical signal indicating US stocks were oversold, spurring a paring of losses that prevented the MSCI All-Country World Index from entering a bear market. The European Central Bank meets on Thursday, the first major monetary authority to review interest rates and policy since turmoil gripped markets at the start of the year.
"The ground right now is so unstable, and there's so much anxiety," said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank Ltd., which has US$453 billion under management. "We saw a rally, but I wouldn't say that we're in a full rebound yet. People are just bottom-fishing."
Futures on the S&P 500 gave up an early gain of as much as 1.1 per cent. Futures on the Euro Stoxx 50 dropped 0.2 per cent as of 7:39 am in London.
The yen reversed earlier declines after policy makers quelled speculation the Bank of Japan is preparing to boost currency-weakening stimulus as soon as next week. Japan's currency climbed 0.4 per cent to 116.49 against the greenback after touching 115.98 per US dollar on Wednesday, the strongest since Jan 16, 2015.
Japan's currency rallied after Masahiko Shibayama, an aide to Prime Minister Shinzo Abe, said it was "too early" to make a decision on the BOJ's reaction to recent stock and foreign exchange moves. BOJ Governor Haruhiko Kuroda said in parliament that the economy was recovering and the price trend is improving, while reiterating he wouldn't hesitate to act if needed. The yen reversed earlier losses against most of its 31 major counterparts after Asian stocks gave up gains.
Brent oil extended its decline from the lowest close in more than 12 years as rising US crude stockpiles added to a swelling global glut. Futures slid as much as 0.9 per cent in London after falling 3.1 per cent on Wednesday to settle at the lowest level since November 2003.
West Texas Intermediate for March delivery slid as much as 30 cents, or 1.1 per cent, to US$28.05 a barrel on the New York Mercantile Exchange. The February contract expired Wednesday after falling 6.7 per cent to US$26.55, the lowest level since May 2003. Total volume traded was about 94 per cent above the 100-day average.
U..oil stockpiles expanded by 4.6 million barrels last week, the industry-funded American Petroleum Institute was said to have reported. That compares with the 2.2 million barrel increase predicted by energy analysts ahead of data from the Energy Information Administration Thursday.
Copper for three-month delivery in London increased 0.2 percent to $4,366.50 a metric ton after gaining as much as 1.5 per cent, while gold climbed 0.3 per cent.