US oil falls below $50 a barrel as Asian shares edge higher

US oil fell below $50 a barrel and gold traded near a five-year low after a selloff that’s seen commodities slide to the lowest in 13 years. The dollar held gains, while Asian shares climbed.

West Texas Intermediate oil fell 0.4 per cent to $49.97 a barrel by 2:11 p.m. in Tokyo, while gold futures retreated 0.4 per cent for a ninth straight decline. The dollar held near a three-month high against the euro, while the yen touched its weakest in a month. The MSCI Asia Pacific Index edged higher with most stocks climbing, and the Topix index rose 0.5 per cent after a holiday. US stock futures were little changed.

The outlook for precious metals and oil prices has soured as the strengthening of the US economy pushes the Federal Reserve toward boosting interest rates for the first time since 2006.

Gold slid the most in two years during 15 minutes of Asian trading Monday as the dollar held onto recent gains. Australia’s central bank said weaker commodity prices probably dragged on first-quarter growth as the country’s currency remained too strong. “Commodities are going to face a lot of headwinds,” said Fross and Fross Wealth Management President Thomas Fross in an interview on Bloomberg TV. “Gold is a really big insurance policy against a declining dollar and a declining economy, and we’re not looking at either of those. As the Fed raises interest rates we think it’s going to force more people out of fixed income and into the equity market.”

Asian markets

Asian shares edged higher on Tuesday, taking heart from fresh highs on Wall Street, while gold prices took back some lost ground after plunging more than 4 percent to five-year lows in the previous session. MSCI’s broadest index of Asia-Pacific shares outside Japan was last up about 0.2 per cent, after wavering between positive and negative territory for much of early trading. Japan’s Nikkei share index rose 0.4 per cent as markets reopened after a public holiday on Monday, climbing to three-week highs on growing expectations for strong first-quarter earnings.

“Although companies won’t likely change their full-year forecasts this time,” investors are keen to see business plans are on track, said Masayuki Kubota, chief strategist at Rakuten Securities. “Most of them expect to confirm that companies’ earnings are resilient.”

Bloomberg/Reuters