Asian share markets were mostly in the red on Wednesday as worries about waning global growth lifted safe-haven bonds, while shoving oil prices to their lowest in more than two years.
Extending a three-month-long decline, Brent oil sank $1.18 to $90.93 a barrel while US crude tumbled $1.07 to $87.78, Business Standard reported.
The protracted slide should be a windfall for consumer spending power, but is also a powerful force for disinflation in much of the developed world.
That has been a boon for sovereign bonds as investors wager the outlook for slowing inflation could put off the day when US interest rates might rise.
Minutes of the Federal Reserve’s last policy meeting are due later in the session and markets will be acutely sensitive to how the debate between hawks and doves on the committee was playing out.
In Asia, Japan’s Topix shed 1.1 percent while the Nikkei dropped 1.0 percent. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1 percent, while Australia’s main index lost 0.9 percent.
China’s markets bucked the trend as they returned from a week-long break, with Shanghai up 0.5 percent, though Hong Kong shed 0.7 percent.
A private survey of China’s services sector showed growth eased a touch in September, but that only served to reinforce expectations of further stimulus measures by Beijing.
Stimulus High in Europe
Stimulus is also high on the agenda in Europe after German industrial output suffered the biggest decline since the height of the financial crisis, piling pressure on the European Central Bank to be more urgent in its actions.
The IMF on Tuesday shaved its global growth forecast to 3.3 percent for this year, from 3.4 percent, warning of weakness in the euro zone, Japan and big emerging markets such as Brazil.
Inflation swaps for the euro zone, which essentially show what investors think inflation will average over the next five years, have been in precipitous decline, touching an historic low of 1.89 percent this week.
This is one of ECB President Mario Draghi’s favored measures of inflation and its decline was a major reason the central bank launched a fresh stimulus package last month.
But the downdraft in inflation expectations is hardly confined to Europe. The US swaps rate has slipped to 2.62 percent, from 2.88 percent in August, even as the run of US economic data has been generally encouraging.
