Most Asian stock markets fell on Wednesday morning as Saudi Arabian and Iranian oil ministers doused weeks of speculation over a deal to boost oil prices, dragging U.S. shares lower. Another shift in China's currency management also rattled investors.
Japan's Nikkei 225 fell 1.1 percent as the yen, which investors see as a safe haven, rose, making the country's export-oriented companies less competitive. Australia's ASX 200 fell 1.8 percent, South Korea's KOSPI slipped 0.1 percent. Singapore's STI fell 0.7 percent, reversing earlier gains.
Singapore on Wednesday morning said fourth-quarter GDP rose an annualized 6.2 percent instead of 5.2 percent, as services offset weaker manufacturing and exports, the Wall Street Journal reported. But for the year, growth was revised to 2.0 percent instead of 2.1 percent.
On Tuesday, the People's Bank of China unexpectedly cut its yuan reference rate the most in six weeks, allowing the currency to slip. That's a shift from last month's decision to stabilize it against the U.S. dollar after a weeklong series of reductions and previous pronouncements of its intention to keep it steady against a basket of currencies, Bloomberg said. The changes are fueling speculation the economy is slowing so much that the government has been forced to scramble.
“We haven’t really seen a consistent framework in the management of the currency,” said Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore Ltd., Bloomberg reported. "Maybe all this flip-flopping we’re seeing is what the authorities mean by saying they want flexibility in the currency.”
In the U.S., the Dow Jones Industrial Average, Standard & Poor's 500 and Nasdaq Composite all fell from 1.1 percent to 1.5 percent.
At an oil industry conference in Houston, Saudi Oil Minister Ali Al-Naimi said an agreement it has been discussing with Russia and other oil producers to cut production is "not going to happen" in part because they don't trust each other to make agreed-on cuts. Meanwhile, Iran Oil Minister Bijan Zanganeh said Saudi Arabia's alternative proposal, to freeze production at January levels, is "a joke." Iran just returned to oil markets last month after years of sanctions, and has plans to boost production through next year to regain previous market share.
The U.S. benchmark fell $1.52, or 4.6 percent, to $31.87 a barrel, while the world benchmark dropped $1.42, or 4 percent, at $33.27 a barrel, Reuters reported, adding that the increase in U.S. stockpiles in the week to Feb. 19 was double what analysts expected.
Lower oil prices — they've come down from over $100 a barrel in mid-2014 — have hurt shares of energy companies and the many industries that supply them around the world.
“Oil prices are back in the spotlight,” said Jason Wong, a currency strategist in Wellington at Bank of New Zealand Ltd., according to Bloomberg. “We think that it’s inevitable that oil prices move back below the $30 market soon as supply continues to outstrip demand and inventory levels are very high,” he said, describing market sentiment as “gloomy.”