Asian stock markets rose on Tuesday while crude oil prices languished near three-week lows, with investors uncertain whether output cuts by some major exporters would be enough to offset increasing supplies from other producers.
Sterling extended losses following its lowest close in three months on renewed concerns about a “hard” Brexit.
European markets were poised for a lackluster start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 .FTSE, which touched a record high as the pound retreated, to open flat; and Germany’s DAX .GDAXI and France’s CAC 40 .FCHI to start the day down 0.2 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced 0.5 percent.
But Japan’s Nikkei .N225 resumed its declines, closing down 0.8 percent as the yen strengthened.
China’s CSI 300 .CSI300 was little changed, largely shrugging off further signs of improvement in the industrial sector. Data earlier in the day showed producer inflation surged to a more than five-year high in December as raw materials prices soared.
Oil prices were little changed after falling nearly 4 percent on Monday, their biggest one-day loss in six weeks. The drop was spurred by fears that record Iraqi crude exports in December, increased supplies from Iran and rising U.S. output would undermine an agreement by exporters, led by Saudi Arabia and Russia, to curb production.
“It’s unusual to have these agreements last for very long because inevitably someone cheats,” said Daniel Morris, senior investment strategist at BNP Paribas Investment Partners.
“It’s certainly conceivable that the agreement falls apart and you get more production than anticipated in addition to already thinking that it (the oil price) should be lower because of dollar strength.”
U.S. crude CLc1 was steady at $51.96 a barrel, while global benchmark Brent LCOc1 was little changed at $54.94.
Sterling edged lower on Tuesday after sharp drops on Monday and Friday pushed the currency to its lowest closing level since Oct. 11.
Standing at $1.215 on Tuesday, the British currency was 0.1 percent weaker, building on Monday’s fall of 1.0 percent, and Friday’s 1.1 percent drop.
Prime Minister Theresa May’s comments on Sunday that Britain would not be keeping “bits” of European Union membership stoked fears of a “hard Brexit”, as she said border controls would be prioritized over market access.
EU officials say Britain cannot have access to its single market of 500 million consumers without accepting the principle of free movement.