Stock rout deepens in Asia as oil plumbs below $30

A trader reacts as he works on the trading floor of the stock exchange in Hong Kong on February 3, 2016.

Oil’s selloff reverberated through Asian markets for a second day, scuttling stocks and high-yielding currencies as anxiety over what the energy slump says about the health of the global economy saw investors seek out government debt. Japanese shares slid the most in almost two weeks and Australia’s benchmark sank as mining and consumer companies drove losses in the regional index. U.S. index futures also dropped. Malaysia’s ringgit led declines among Asian currencies with the Korean won, while the New Zealand dollar rallied after the central bank chief signaled he’s in no rush to cut interest rates further. Australian 10-year bond yields slid to the lowest level since October as rates on Japanese notes fell two basis points. U.S. crude fell a third day, extending losses below $30 a barrel ahead of an update on American oil inventories. U.S. crude has obliterated last week’s rebound as energy analysts predict another round of stockpile gains amid simmering concern over the supply glut and a lack of willingness by major oil producers to address it. Anxiety that the drop in oil and wider turmoil across financial markets will impact world growth is taking root, with an index run by Citigroup Inc. indicating data in Group of 10 economies is falling short of estimates by the most since May 2013. Exxon Mobil Corp. reported its biggest earnings decline in more than a decade on Tuesday, after BP Plc posted a 91% slump in its own quarterly profit. “The underlying fundamentals are deteriorating and the talk of recession is getting louder,” Chris Weston, chief market strategist at in Melbourne at IG Ltd., said by phone. “When you see BP coming out with disastrous results and when you see Exxon cutting back on expenditures again, you realize the implication weak oil has on economies. How much more can central banks do from here?” A measure of service-industry growth in China, the epicenter of investors’ concerns at the start of the year, is due Wednesday, and Thailand is expected to keep its benchmark interest rates on hold. The Bank of Japan, which surprised markets with a stimulus boost last week, saw no need to ease policy at the end of last year, December meeting minutes showed. “Since the BOJ cut last week, markets have been on edge, concerned that the global situation is considerably worse than initially envisaged and that global central bank’s will be unable to combat deflationary risks driven by plummeting oil prices,” Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. (By Emma O'Brien and Jonathan Burgos/Bloomberg)

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