SHAFAQNA – Asian stocks fell early on Thursday as falling oil prices continued to feed into global growth concerns, while the dollar lost more ground against peers such as the yen and euro after a further drop in U.S. bond yields.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.2 percent as another large drop in oil prices took a heavy toll on energy shares and hit Wall Street hard overnight.
Crude oil prices fell as much as 5 percent overnight after data underscored weak U.S. demand and Saudi Arabia reiterated that it has no plans to curb output. [O/R]
U.S. crude CLc1 posted a modest rebound early on Thursday after the overnight tumble, gaining 26 cents to $61.20 a barrel after falling to a 5-1/2 year low of $60.43 on Wednesday.
Tokyo’s Nikkei .N225 lost 1.6 percent, pulling further back from 7-1/2 year highs hit at the week’s start, with sentiment bruised by the rout in U.S. stocks, while the yen’s rebound against the dollar showed little sign of ending.
The dollar was down 0.1 percent at 117.610 yen JPY=, continuing its retreat from a seven-year high of 121.86 reached on Monday.
The S&P 500 .SPX, at a record high just last Friday, fell to its lowest since early November on Wednesday.
“Recent nervousness in equity market sentiment is consistent with our view that equity fund positioning is near peak levels, which points to a near-term pullback,” strategists at Barclays said in a note to clients.
“With underperformance by active managers, we worry that redemptions will continue and force an unwind of currently extended positioning,” they said.
In addition to declining oil, concerns over the political situation in Greece have also dented appetite for risk assets.
The euro gained 0.3 percent to $1.2479 EUR=, putting further distance between a 2-1/2 year trough of $1.2247 hit on Monday.
Safe-haven government debt remained better-bid, with the 10-year U.S. Treasury yield US10YT=RR dropping by a basis point to 2.1603.
The benchmark 10-year Japanese government bond yield JP10YTN=JBTC fell 1.5 basis points to 0.390 percent, lowest since April 2013.