Asian stocks dropped and Malaysia’s ringgit weakened after oil’s collapse to a five-year low triggered the biggest loss for U.S. stocks since October. Sovereign bonds followed Treasuries higher as Asian credit risk climbed to a three-week high.
The MSCI Asia Pacific Index fell 0.3 percent by 11:01 a.m. in Tokyo, heading for a seven-week low as benchmark gauges in Tokyo and Hong Kong fell more than 0.7 percent. Futures on the Standard & Poor’s 500 Index added 0.2 percent after the U.S. measure tumbled 1.6 percent. The yen slipped 0.3 percent after its biggest surge in 18 months, while the ringgit fell 0.4 percent. Australia’s dollar climbed after a jobs report beat estimates. West Texas Intermediate crude increased 1 percent after a 4.5 percent plunge.
The yield on 10-year Treasury (USGG10YR) notes dropped to 2.17 percent yesterday as tumbling oil prices spurred a selloff from stocks to metals and corporate debt. OPEC cut the forecast for how much crude it will need to provide in 2015 to the lowest level in 12 years and U.S. crude inventories rose to the highest seasonal level since 1982, the Energy Information Administration said. The oil rout is feeding concerns about deflation from Tokyo to Beijing and Brussels amid weakening global growth.