Asian stocks slide after Wall Street losses, oil drops on glut concerns

Pedestrians walk along Wall Street in New York.
Pedestrians walk along Wall Street in New York. PHOTO: BLOOMBERG

SINGAPORE (Reuters) - Asian shares tumbled in early trade on Wednesday (Oct 26), following in the footsteps of Wall Street, which pulled back on disappointing earnings, while the dollar inched down from a seven-month high and oil prices slid.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3 per cent.

Japan's Nikkei lost 0.2 per cent, while South Korea's KOSPI dropped 0.8 per cent and Australia fell 1.4 per cent.

Singapore's Straits Times Index was down 0.67 per cent to 2,834.86 as of 9:29am.

US stocks ended Tuesday down between 0.3 and 0.5 per cent, as results and forecasts from companies in sectors including housing and consumer products missed expectations.

Apple too dragged the market lower, as iPhone sales, which were better than expected, nevertheless continued a declining trend. The company also forecast slimmer-than-expected profit margins over the coming holiday season, even as it projected record sales.

The US declines followed a mixed performance in Europe, with British shares closing up 0.45 per cent, Germany flat after hitting its highest level this year, and France down 0.3 per cent. The broader European STOXX 600 fell 0.3 per cent.

"We had a rally (on Monday) and haven't been able to sustain it, due to weaker-than-expected numbers from some names," said Peter Jankovskis, co-chief investment officer at OakBrook Investments. He called the day's earnings report a "mixed bag" for stocks.

The dollar index, which tracks the greenback against a basket of six global peers, was steady at 98.726 early on Wednesday.

It hit its highest level since Jan 2 on Tuesday as traders saw a more than 78 percent chance of an interest rise hike by the Federal Reserve in December, according to CME Group's FedWatch data.

The US dollar slipped 0.1 per cent to 104.1 yen after touching the highest level in almost three months on Tuesday.

Sterling retreated 0.1 to US$1.2180 on Wednesday.

On Tuesday, it slumped to as low as US$1.2082, its weakest in 2 1/2 weeks after Bank of England (BoE) Governor Mark Carney said there were limits to the central bank's ability to ignore the effect of the currency's slide on inflation. His comments, ahead of a policy meeting next week, doused expectations for more monetary stimulus in Europe.

The euro, which slid to a 7 1/2-month low of US$1.0851 on Tuesday, recovered to end the session flat, and was trading little changed at US$1.0887 early on Wednesday.

The stronger dollar and a report that showed US inventories grew nearly three times as much as forecast weighed on oil prices.

US crude fell 1.4 per cent to US$49.29 on Wednesday. It is down 3.1 per cent this week.

Brent futures retreated 1.1 per cent to US$50.25, bringing this week's losses to 3 per cent.

"Basically, the glut continues and demand is not coming back," said Phil Davis, a trader at PSW Investments. "I don't want to read too much into it but the fact of the matter is it certainly doesn't support US$50 oil."