Japan shares lead Asia lower, dollar index slumps
By Lisa Twaronite
Shanghai shares bucked the downtrend and added 0.1 percent after Chinese bank lending data provided a regional bright spot. Lending beat expectations last month, a sign that demand for credit may be picking up, though a drop in China's foreign exchange reserves in the third quarter suggested ominous speculative money outflows.
The S&P 500 briefly turned negative for the year on Wednesday, though S&P 500 e-mini futures added 0.4 percent, which might portend a more stable day ahead on Wall Street as investors await more U.S. data.
September industrial output and weekly jobless claims will be released later on Thursday and could paint a brighter picture than downbeat figures released in the previous session, which came after a recent spate of weak figures from China and Europe that raised fears about the health of the global economy.
U.S. retail sales and producer prices both dropped last month, a worrisome economic signal that helped fuel a sell-off on Wall Street as it quashed expectations the U.S. Federal Reserve would raise U.S. interest rates sooner rather than later.
The grim mood sparked a safe-haven rally in U.S. Treasuries and pushed the yield on the benchmark 10-year note as low as 1.865 percent, its deepest nadir since May 2013. It last stood at 2.093 percent in Asian trade.
Only a month ago, fed funds futures had suggested traders priced in almost a 50 percent chance of a Fed rate increase as early as June 2015. But a jump in short-term U.S. interest rate futures on Wednesday implied traders anticipate the U.S. central bank would not move away from its near zero rate stance until the end of the first quarter in 2016.
The dollar's index against a basket of six major currencies stood at 85.068, down about 0.1 percent on the day and wallowing near levels last plumbed in September. Speculation of higher U.S. interest rates had pushed the index to a four-year high of 86.746 earlier this month.
Against the yen, the dollar took back some lost ground, adding about 0.3 percent on the day to 106.20 yen, after dropping to a more than one-month low around 105.20 on Wednesday. The euro slumped to $1.2792 after rising as high as $1.2885 overnight, its highest level since last month.
The dollar's sharp fall overnight lent modest support to oil prices, with U.S. crude futures ending just 6 cents lower at $81.78 on Wednesday. But the contract plunged 1.7 percent in Asian trade to $80.43, while Brent crude shed 1.1 percent to $82.72.
Spot gold was steady at $1,239.60 an ounce, not far from a one-month high of $1,249.30 on Wednesday.