Asia stocks follow Wall Street's negative lead; STI bucks the trend to open higher

A pedestrian looks at a display showing closing figures of Tokyo's benchmark Nikkei Stock Average in Tokyo.
A pedestrian looks at a display showing closing figures of Tokyo's benchmark Nikkei Stock Average in Tokyo.PHOTO: EPA

SINGAPORE (REUTERS) - Asian stocks were mostly lower on Thursday morning following a subdued lead from Wall Street, while the US dollar pulled up from near two-week lows and pound sterling languished under the weight of political fears one week before Britain's election.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent and looked set for its fifth straight session of losses as investors took profits after stocks hit a two-year high last week and as economic and geopolitical concerns continued to weigh on sentiment.

Japan's Nikkei advanced 0.8 per cent after data showing recurring first-quarter corporate profits were the highest on record for the January to March period. An increase in capital expenditure in the first quarter also adds to a raft of recent data pointing to economic expansion. Manufacturing growth in Japan also rose to a three-month high, according to a business survey.

Australian stocks retreated 0.2 per cent. South Korea's KOSPI fell 0.3 per cent and the Korean won weakened 0.2 per cent to trade at 1,121 won to the US dollar after data showed factory activity in May shrank for the 10th straight month. Singapore shares were an exception opening higher, with the benchmark Straits Times Index at 3,216.65 in early trade, up 0.18 per cent, or 5.83 points. Around 139 million shares exchanged hands.

Overnight, Wall Street closed slightly lower as financials lost ground after JPMorgan and Bank of America warned of revenue weakness in the current quarter, but gains in defensive plays offset the decline.

All three major US indexes ended May in positive territory. The US dollar gained after touching a near two-week low against the yen overnight. It was up 0.2 per cent from its previous close at 110.95 early on Thursday, its first positive session in five, but concerns about US politics capped gains.

"The dollar remains pressured by the mounting dysfunction in Washington that has all but eliminated hopes for a bold fiscal stimulus package from the Trump administration," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Pound sterling retreated 0.15 per cent to US$1.2872 on Thursday after a YouGov poll showed Prime Minister Theresa May could lose control of parliament in Britain's June 8 election, raising the prospect of political turmoil just as formal Brexit talks begin.

Other polls, however, show Ms May winning a big majority.

In commodities, oil prices attempted to claw back some of the losses posted on Wednesday after an increase in Libyan output helped boost monthly OPEC production for the first time this year.

Global benchmark Brent advanced 1.8 per cent to US$51.21 a barrel after slumping 3 percent on Wednesday. US crude rose 1 percent to US$48.82, after plunging 2.7 percent in the previous session. Gold was steady at US$1,267.91 an ounce.