Asian stocks hover as investors weigh China's yuan fixing, oil's retreat

Pedestrians walking past a currency exchange in Hong Kong on Aug 12.
Pedestrians walking past a currency exchange in Hong Kong on Aug 12. PHOTO: BLOOMBERG

SINGAPORE (BLOOMBERG) - Asian stocks fluctuated, with the regional benchmark index headed for a fourth weekly decline, as investors weighed an increase in China's yuan reference rate and a slide in energy shares on a drop in oil.

The MSCI Asia Pacific Index fell less than 0.1 per cent to 138.35 as of 10:14 a.m. in Hong Kong after rising as much as 0.2 per cent. The gauge is heading for a 1.9 per cent retreat this week.

The People's Bank of China's fixing strengthened after slides of at least 1.1 per cent in each of the last three days. US retail sales added to signs the world's largest economy is strengthening, and raised expectations the Federal Reserve may raise rates next month.

"As yuan concerns dissipate, there's probably room for a short-term rebound in the markets," Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which oversees about US$118 billion said by phone. "It's hard to imagine sustainable gains given the prospects of the Fed raising rates next month."

Chinese equities climbed after the fixing, while the freely traded offshore yuan advanced 0.6 per cent, trimming its weekly loss to 3.5 per cent. The onshore spot rate was little changed at 6.3993 per dollar.

The Shanghai Composite Index rose 0.7 per cent. The Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong advanced 0.2 per cent, as did the city's benchmark Hang Seng Index.

Energy shares led losses among the 10 industry groups on the regional benchmark index. Crude headed for a seventh weekly drop, the longest run of declines since January, amid signs the global glut that's driven prices to the lowest in six years will be prolonged.

Japan's Topix index was little changed, heading for its first weekly decline in three weeks. Singapore's Straits Times Index climbed 0.7 per cent. Australia's S&P/ASX 200 Index was little changed. New Zealand's NZX 50 Index rose 0.3 per cent. Taiwan's Taiex index fell less than 0.1 per cent.

Futures on the Standard & Poor's 500 Index were little changed. The underlying index slipped 0.1 per cent on Thursday.