Asian energy stocks fell with oil after the world’s biggest crude producers failed to agree on supply cuts, while rising metals prices in China spurred gains in mining shares. Gold was buoyed by haven demand following the reopening of an FBI probe into Hillary Clinton.
The MSCI Asia Pacific Energy Index and crude both slipped to one-month lows after the Organization of Petroleum Exporting Countries ended two days of talks on Saturday without agreeing any individual quotas. A gauge of raw-materials producers climbed toward its highest level in almost four months as aluminum and zinc rallied to multi-year highs in Shanghai. Gold rose for a third day after a survey pointed to cooling support for Clinton before next week’s U.S. presidential election, while the rand gained versus major peers.
Global equities have lost ground in October as mixed corporate earnings meld with investor anxiety ahead of the Nov. 8 vote in the U.S. and expectations the Federal Reserve will hike interest rates before the year is out. The S&P 500 Index slid 20 points in about 40 minutes on Friday amid news the Federal Bureau of Investigation was again looking into Clinton’s use of private e-mail while secretary of state, an issue that has dogged her campaign. OPEC talks over two days in Vienna yielded little more than a promise that the world’s top oil producers would keep discussing ways to stabilize the market.
“Until the election, the general theme will be uncertainty, which will have implications not just on the stock market, but on the dollar and Treasuries,” said Chad Morganlander, a money manager in Florham Park, New Jersey at Stifel, Nicolaus & Co., which oversees about $180 billion. “The probability that was factored into the market and the global financial system was a Hillary Clinton victory – investors now need to square their books going into the election based on whatever new odds come out.”
Stocks
A gauge of energy shares on the MSCI Asia Pacific Index was down 0.2 percent as of 3:06 p.m Tokyo time, while a measure of raw-materials producers added 0.8 percent. About the same number of stocks rose as fell on the dollar-denominated benchmark, which has barely moved in October following a third-quarter gain of 8.4 percent that marked its best performance in more than four years.
Japan’s Topix index held near its highest level since April and the Shanghai Composite Index declined for a fourth day. Hong Kong’s Hang Seng Index advanced for the first time in a week, while markets in India and the Philippines were shut for holidays.
AIA Group Ltd. shares slumped as much as 7.2 percent after China UnionPay Co. halted credit and debt card payments for most insurance policies in Hong Kong, making it harder to conduct transactions with Chinese visitors that accounted for about half of the company’s sales in the city. Nippon Yusen KK and Mitsui O.S.K. Lines Ltd. — Japan’s two largest shipping companies — surged more than 5 percent in Tokyo after they agreed to merge their container operations with those of third-ranked Kawasaki Kisen Kaisha Ltd., which added less than 1 percent.
Futures on the S&P 500 Index rose 0.3 percent, after earlier retreating as much as 0.4 percent. An ABC/Washington Post tracking survey released Sunday gave Clinton 46 percent support from likely voters, to Trump’s 45 percent. Clinton was ahead by 12 points a week earlier.
“The race remains very tight and markets are far too complacent about the end result,” said Matthew Sherwood, head of investment strategy in Sydney at Perpetual Ltd., which manages about $21 billion. “If the polls tighten more, or the FBI investigation dominates the headlines, there could be a recalibration in market prices this week.”
Commodities
Crude oil fell 0.4 percent to $48.50 a barrel in New York. OPEC ended a meeting on Friday without reaching a deal on country quotas, according to delegates who took part in the discussions. Major producers from outside OPEC finished talks with the group on Saturday without any supply commitments, Brazil’s Oil and Gas Secretary Marcio Felix said. Oil has fluctuated near $50 amid uncertainty about whether OPEC can implement the first supply cuts in eight years at its official November meeting.
“Talks over the weekend make it seem less likely there will be an agreement on production cuts,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “The market has probably made a fair bit of the adjustment, but I wouldn’t be surprised to see oil fall further into the $47 range.”
Gold added 0.2 percent, after rallying 0.6 percent on Friday. The metal’s gains reflect “safe-haven buying after the FBI reopened its inquiry into Hillary Clinton’s use of a private e-mail server,” Australia & New Zealand Banking Group Ltd. analysts wrote in a note on Monday.
Aluminum and zinc extended gains in Shanghai as investors bet that strong domestic demand, surging coal prices and logistical issues will underpin prices. Aluminum rose as much as 3.1 percent to its highest level since September 2014, having jumped by about 10 percent last week. Zinc climbed to the highest since March 2011.
Currencies
The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, rose less than 0.1 percent after retreating 0.3 percent from a seven-month high in the last session. It’s climbed 2.2 percent this month, the biggest gain since May.
While the Fed is seen leaving policy unchanged at a review this week, futures prices indicate a 69 percent chance of an interest-rate hike at its December meeting, up from 59 percent at the end of September. American data on Monday are forecast to show personal spending and income both increased in September, based on Bloomberg surveys of economists.
The rand strengthened 0.6 percent after City Press newspaper reported that South African prosecutors may drop fraud charges against Finance Minister Pravin Gordhan, who has been a key driver of a campaign to maintain the nation’s investment-grade credit rating. The National Prosecuting Authority said Sunday there were no such plans.
The Mexican peso fluctuated near a two-week low versus the dollar, after three days of losses. Mexico’s currency tends to fall when U.S. presidential candidate Donald Trump gains ground in polls, reflecting concern about his pledges to renegotiate a free-trade agreement and deport millions of undocumented immigrants.
South Korea’s won rose 0.3 percent, having earlier sank to a three-month low as President Park Geun-hye deals with an influence-peddling scandal that’s sparked calls by the ruling party for her to remove the prime minister. Prosecutors raided Park’s office over the weekend to investigate allegations her close friend Choi Soon-sil — a private citizen whom opposition lawmakers have linked to a religious cult — wielded influence on state affairs over an extended period.
China’s yuan strengthened 0.2 percent, paring its biggest monthly loss since May. The currency advanced from near a six-year low following Friday’s retreat in the dollar and as China’s clampdown on UnionPay payments for insurance products in Hong Kong provided support. The transactions have been used as a means of skirting capital controls to take funds out of the mainland.
Bonds
The yield on U.S. Treasuries due in a decade declined one basis point to 1.84 percent, after touching a five-month high of 1.88 percent on Friday. Sovereign debt in the world’s biggest economy has lost 1.2 percent on average this month, the worst performance since February 2015, a Bloomberg index shows.
The selloff in Treasuries may pause because the FBI’s investigation of Clinton could spur demand for the safest assets, said Hiroki Shimazu, an economist and strategist at the Japanese unit of MCP Asset Management in Tokyo.
China’s one-year interest-rate swaps rose four basis points to an 18-month high of 2.75 percent in Shanghai. The increase reflects speculation policy makers will seek to keep money rates high as they tackle asset bubbles and try to stem declines in the yuan.
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