Asian Stocks Follow U.S. Lower Amid Wild Oil Swing: Markets Wrap 

• Stockpiles report reverses oil drop tied to Saudi output
• Equities from Singapore to Tokyo slip ahead of Fed decision

Crude oil whipsawed on production and stockpiles reports, while most Asian markets followed U.S. equities lower and the dollar slipped before an expected interest-rate hike by Federal Reserve policy makers.

Oil jumped above $48 a barrel as a reported decline in U.S. crude stockpiles countered a boost in output from Saudi Arabia, reversing an earlier plunge of as much as 2.7 percent. Stocks were lower from Singapore to Tokyo, while Hong Kong shares pared losses as Chinese Premier Li Keqiang played down the risk of a trade conflict with the U.S. The pound rebounded after Tuesday’s drop, and the yield on 10-year Treasuries remained near 2.6 percent.

The swings in oil interrupted the calm that’s gripped markets ahead of central bank decisions, European political drama and a raft of economic data that could set the tone for financial markets for weeks to come. With the Fed all but certain to raise rates, investors have been weighing how oil’s precarious level and looming inflation readings could impact the central bank’s path for future moves.

Volatility is rising this week, with the VIX in the U.S. jumping the most in a month on Tuesday, while a gauge for the Nikkei 225 climbed for a fourth straight day. Elections remain a wild card for investors. Wednesday’s vote in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up.

U.S. trading was more muted than normal on Tuesday as a late-winter storm blanketed the eastern part of the country in snow. Airlines canceled thousands of flights, wholesale power prices surged and natural gas futures gained as the storm spun up the Atlantic Coast.

What investors will be watching:

• The Fed’s decision will be announced at 2 p.m. in Washington, followed by Chair Janet Yellen’s news conference a half hour later. The case for a quarter-point hike was bolstered Tuesday by stronger-than-expected U.S. producer prices. Investors are focused on any hints of a change in the number of increases the central bank foresees this year.
• The Bank of Japan is set to keep its rates and yield-curve policy unchanged in its policy decision on Thursday. The Bank of England, Swiss National Bank and Bank Indonesia are also expected to stand pat with policy decisions.
• U.S. Secretary of State Rex Tillerson travels to Japan, South Korea and China in his first visit to the region since taking office. He arrives in Tokyo on Wednesday, continues to Seoul on March 17 and Beijing on March 18. His discussions with senior officials will address the missile threats from North Korea and shared economic interests.
• U.S. President Donald Trump’s first budget outline for fiscal 2018 is expected on Thursday. He’s said he’ll seek a $54 billion boost in defense spending, paid for by an equal amount of cuts to non-defense agencies.

Here are the main market moves:

Commodities

• West Texas Intermediate crude gained 1.8 percent to $48.57 as of 3:08 p.m. in Tokyo. U.S. inventories fell by 531,000 barrels last week, the industry-funded American Petroleum Institute was said to report. Oil lost 1.4 percent Tuesday, touching a low of $47.09, after an OPEC report showed Saudi Arabia’s production climbed back above 10 million barrels a day in February.
• Gold climbed 0.4 percent to $1,203.59 an ounce after falling 0.4 percent Tuesday.
• Iron ore jumped 6 percent, adding to a 4.3 percent advance in the previous session.

Stocks

• Japan’s Topix index fell 0.2 percent and South Korea’s Kospi lost 0.2 percent. New Zealand’s S&P/NZX 50 declined 0.6 percent.
• Australia’s S&P/ASX 200 Index rose 0.3 percent, reversing an earlier drop of as much as 0.6 percent as raw-materials shares rebounded.
• Hong Kong’s Hang Seng dropped less than 0.1 percent and the Hang Seng China Enterprises Index lost 0.3 percent, with both paring earlier declines of more than 0.7 percent. Li said at a press conference after the close of the annual National People’s Congress that it’s important for both China and the U.S. to keep talking to build trust, and that China doesn’t want to see a trade war.
• Futures on the S&P 500 added 0.2 percent. The benchmark index slipped 0.3 percent on Tuesday, while the Stoxx Europe 600 Index fell by the same degree.

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 percent after climbing 0.3 percent the day before. The South Korean won and the Taiwanese dollar rose at least 0.3 percent.
• The yen weakened less than 0.1 percent to 114.80 per dollar, after being the only major currency to gain against the greenback Tuesday.
• The British pound jumped, increasing 0.6 percent to $1.2221, after sliding 0.5 percent Tuesday. U.K. Prime Minister Theresa May is preparing to trigger Brexit in the last week of March after securing the permission of lawmakers to begin two years of talks with the European Union.

Bonds

• The yield on 10-year Treasury notes fell less than one basis point to 2.60, after slipping three basis points in Tuesday trading. The equivalent Australian rate was little changed at 2.92 percent.

Source: Bloomberg

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