Asia stocks struggle as global woes persist; STI up 0.3%

Hong Kong's Hang Seng fell 0.3 per cent.
Hong Kong's Hang Seng fell 0.3 per cent.PHOTO: AFP

TOKYO (REUTERS) - Asian stocks edged lower on Wednesday (Oct 24) as concerns, ranging from worries about US corporate earnings to Middle East tensions, weighed on sentiment while crude oil approached two-month lows after Saudi Arabia flagged possible supply increases.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent, extending the decline of more than 2 per cent in the previous session.

Global stocks have suffered this week on worries about US earnings, Italian government finances, US trade tensions and mounting pressure on Saudi Arabia over the death of dissident journalist Jamal Khashoggi.

Saudi Arabia's diplomatic standing looked increasingly precarious as Turkey dismissed the kingdom's efforts to blame Khashoggi's death on rogue operatives while US President Donald Trump said Riyadh staged the "worst cover-up ever."

Hong Kong's Hang Seng fell 0.3 per cent while the Shanghai Composite Index retreated 0.6 per cent.

South Korea's Kospi slipped 0.25 per cent and Japan's Nikkei lost 0.35 per cent, handing back earlier gains.

Bucking the trend, Singapore's Straits Times Index was up 0.3 per cent to 3,041.05 as of 10:55am.

Equity losses in the region were modest, however, after a late round of buying helped Wall Street indexes pare most of their earlier panic-driven losses.

Wall Street's three major indexes slumped early on Tuesday but ended well off the day's lows as investors snapped up beaten-down shares late in the session.

"Broader market sentiment remains fragile, but as last night's resilience by Wall Street shows, sentiment has not broken down completely," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

"We may see more bouts of 'mini panic' until the US midterm elections, but the bottom line is that the US economy is in good shape and that should prevent sentiment from breaking down."

The US dollar flagged against the yen, which is often sought in times of risk aversion. The US currency was at 112.49 yen after dropping 0.35 per cent overnight.

The greenback was also weighed by a decline in Treasury yields, as the recent risk aversion drove investors to safe haven government bonds. The 10-year Treasury note yield was at 3.158 per cent after stooping to a three-week low of 3.111 on Tuesday.

China's yuan added to the previous day's modest gains and rose to 6.9369 per dollar in onshore trade, continuing its modest pull-back from a near two-year low of 6.9445 marked on Monday.

The pound was little changed at US$1.2976 and near a three-week trough of US$1.2937 brushed overnight.

Sterling briefly gained half a per cent against the dollar on Tuesday after a media report that the European Union could offer British Prime Minister Theresa May a UK-wide customs union to clinch a Brexit deal.

The pound's strength was fleeting, however, a sign the market remains unconvinced May can successfully sell any deal to her Conservative party colleagues and get it through parliament.

The euro was steady at US$1.1463 after nudging up 0.05 per cent the previous day.

The dollar index against a basket of six major currencies was flat at 96.979 after posting a modest loss the previous day.

In commodities, US crude futures traded at US$66.41 per barrel after dropping roughly 4 per cent on Tuesday to a two-month low of US$65.74.

Brent crude futures traded at US$76.53 per barrel after dropping more than 4 per cent on Tuesday to US$75.88, their lowest since Sept 7.

Crude slid after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of US sanctions on Iran.

The recent sell-off in global equities has also raised worries about slowing growth curbing demand for crude.