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Asia markets caught between oil drop and S&P 500 rally

Friday 02.40 BST

Overview

Asian stocks were mixed on Friday as a sharp overnight drop in oil prices countered positive sentiment surrounding a record high for the S&P 500.

Hot topic

Major oil producers stepped up their attempt to curtail a three-year supply glut by agreeing to extend production cuts beyond the initial deadline of March next year.

Oil prices rallied for days in the lead-up to Thursday’s meeting in Vienna, buoyed by an agreement last week between Russia and Saudi Arabia to extend the production cuts, which had been in place since December.

In an explicit case of buying the rumour and selling the fact, Brent crude, the international benchmark, sank 4.6 per cent on Thursday when the Opec deal was inked. That was oil’s third-biggest one-day drop of the year. The benchmark was up 0.1 per cent in Asia at $51.49. West Texas Intermediate was down 0.2 per cent at $48.82 on Friday, having fallen 4.8 per cent the previous session.

Equities

The energy sector was the worst performer in both Japan and Australia, down 0.9 per cent and 1.7 per cent respectively. As for the countries’ benchmarks, the Topix was off 0.1 per cent, while the S&P/ASX 200 was down 0.7 per cent, with declines for miners also weighing on the Australian market.

Hong Kong’s Hang Seng was up 0.3 per cent and trading at its highest level since July 2015, while the Shanghai Composite added 0.3 per cent. China stocks have continued to creep higher in the wake of Moody’s China sovereign ratings downgrade on Wednesday to A1.

The S&P 500 gained 0.4 per cent on Thursday to a record of 2,415.1.

Forex

The Japanese yen was 0.1 per cent firmer today at ¥‎111.74 per dollar as data on Friday showed headline consumer prices had risen in line with expectations during April.

The dollar index, a measure of the US currency against a basket of global peers, was flat for a second straight session at 97.259.

The euro was down 0.1 per cent at $1.12 on Friday as it continues a pullback after hitting an eight-month high on Monday.

Commodities

Gold was up 0.1 per cent at $1,256.9 an ounce in Asia.

Iron ore futures were down 1.8 per cent in China to a six-month low, facing a fourth straight day of declines and weighing upon Australian mining stocks.

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