By Hideyuki Sano
TOKYO (Reuters) – Asian shares were down on Thursday as the Hong Kong market fell for a second consecutive session following a massive street protests, while oil prices flirted with five-month lows due to higher inventories and a bleak demand outlook.
Hopes that the United States and China will clinch a deal on the sidelines of a Group of 20 summit meeting in Osaka on June 28-29 have been fading, so hurting sentiment and driving bond yields down.
You can not expect any major agreement, "said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
MSCI's broadest index of Asia-Pacific shares outside Japan fell as much as 1%, as Hong Kong's dropped 1.5% following Wednesday's 1.7% fall.
The selling pressure in Hong Kong came after a mass demonstration against China.
Japan's lost 0.8% while U.S. stock futures lost 0.3% in Asia, following small losses the previous day when the shed 0.20%.
Oil hovered near five-month lows, crude stockpiles, as well as the bleaker outlook for demand posed by prospects of a protracted trade was between China and the United States.
futures barely moved at $ 60.06 in early trade after a 3.7% slide on Wednesday to $ 59.97 a barrel, the international benchmark's lowest close since Jan. 28.
U.S. West Texas Intermediate crude futures stood at $ 51.12 per barrel, compared to the previous day's close of $ 50.72 a barrel, its weakest settlement since Jan. 14.
Weaker oil prices will curb inflation and boost rate cut expectations, "said Daiwa 's Kabeya.
Government data showed on Wednesday. consumer prices barely rose in May, with the core annual inflation slowing to 2.0%, compared to a peak of 2.4% last July.
Investors Want to See What Fed Policy Makers Want to Say After It's Next Policy Meeting on June 18-19, with Fed Funds Rate Futures Pricing in a 25-Point Cut Rate for the Subsequent Policy Review on July 30-31.
The 10-year U.S. Treasuries yield about 2.103 percent, near Friday's 2.053 percent, its lowest level since September 2017.
Bonded fur in Asia. Long-dated Japanese government bonds yield their lowest levels since August 2016, with 20-year yield down 2.5 basis points at 0.220 percent.
In Australia, long known for its high-yield currency, yields fell to record lows, with three-year yield now slipping below 1 percent.
In the currency market, the yen gained 0.25% to 108.25 to the dollar as risk sentiment while the Australian dollar dropped 0.2% to $ 0.6913.
The euro has changed little at $ 1.1293, having taken a hit on Wednesday after. President Donald Trump said he was considering sanctions over Russia's Nord Stream 2 pipeline project and warned Germany against being dependent on Russia for energy.
The British pound is on the back foot after British lawmakers are defeated by the Labor Party.
Sterling fetched $ 1.2688, not far from this week's low of $ 1,2653.