published Mar 14th 2017, 6:11 pm, by Benjamin Purvis

(Bloomberg) —
Futures indicated Asia-Pacific equities were set to follow U.S. and European stocks lower ahead of Wednesday’s Federal Reserve decision as oil output disclosures by Saudi Arabia and U.S. stockpiles data whipsawed crude.

Oil dropped as much as 2.7 percent Tuesday in New York to almost $47 a barrel after OPEC data showed Saudi Arabia reversed one third of the production cuts, and then erased its decline as U.S. inventories unexpectedly fell. The S&P 500 fell by the most in almost two weeks. The greenback maintained gains against most major peers, while the British pound held lower. The yield on 10-year Treasuries dropped, although it remained above 2.6 percent.

The swings in oil interrupted the calm that’s gripped markets ahead of central bank decisions, European political drama and a raft of economic data that could set the tone on financial markets for weeks to come. With the Fed all but certain to raise rates, investors have been weighing how oil’s precarious level and looming inflation readings could impact the central bank’s path for future moves. Wednesday’s election in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up.

U.S. trading was more muted than normal on Tuesday as a late-winter storm is blanketing the eastern part of the country in snow. Airlines canceled thousands of flights, wholesale power prices surged and natural gas futures gained as the storm spun up the Atlantic Coast.

Here are the main market moves:

West Texas Intermediate crude oil slid as much as 2.7 percent Tuesday to touch a low of $47.09, although it rebounded to trade at $48.48 in early Asian trading Wednesday. The S&P 500 slipped 0.3 percent, while the Stoxx Europe 600 Index fell by the same degree. Australia’s S&P/ASX 200 Index slipped 0.2 percent and New Zealand’s S&P/NZX 50 lost 0.3 percent. Futures on the Nikkei 225 Stock Average dropped 0.1 percent, while contracts on South Korea’s Kospi fell 0.2 percent. Futures on the Hang Seng were down 0.2 percent in most recent trading. The Bloomberg Dollar Spot Index was little changed Wednesday after climbing 0.3 percent the day before. The British pound was steady after after sliding 0.5 percent on the back of Brexit concerns. The yen strengthened 0.1 percent to 114.68 per dollar, after being the only major currency to gain against the greenback Tuesday. The yield on 10-year Treasury notes fell three basis points to 2.60 percent in Tuesday trading. The equivalent Australian rate was little changed at 2.93 percent. Aluminum fell 1.1 percent to $1,860 a metric ton on Tuesday as China, the largest producer, increased output to a record. Gold was holding at just under $1,200 an ounce after falling 0.4 percent Tuesday.
To contact the reporter on this story: Benjamin Purvis in Sydney at bpurvis@bloomberg.net To contact the editors responsible for this story: Jan Dahinten at jdahinten@bloomberg.net Jeff Sutherland
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