HONG KONG, Feb 17 — The South Korean won fell along with Asian equities and the yen gained after China weakened the yuan’s daily fixing by the most in more than a month. Malaysia’s ringgit slumped to a two-week low as a deal between Saudi Arabia and Russia to freeze oil production failed to assuage anxiety over this year’s crude selloff.

The MSCI Asia-Pacific Index dropped for the first time in three days, while the Indonesian rupiah and the won depreciated more than 0.5 per cent amid speculation their central banks will bolster stimulus to help boost economic growth.

The Australian and New Zealand dollars weakened after China fixed the yuan lower, while US index futuresfell. American crude was below US$30 (RM126.34) a barrel after the world’s two biggest oil producers agreed to hold output near record-high levels, dashing speculation that they would cut it.

“There is an increasing bias towards policy easing in the region, and we’re looking for rate cuts in China, India, Indonesia and Korea,” said Mitul Kotecha, head of Asian foreign- exchange and interest-rate strategy at Barclays Plc in Singapore.

“That will undermine currencies in the region. We’ve seen a little bit of intensification of risk aversion.”

Central bank attempts to steady global markets this year amid unprecedented volatility have had mixed success, with Japanese shares initially falling after the Bank of Japan announced a move into negative interest rates.

Oil’s volatile journey in 2016 has fueled that uncertainty, amid concern over the impact on inflation. Minutes of the Federal Reserve’s most recent meeting, where officials indicated they were monitoring the turmoil in markets, are due today.

Chair Janet Yellen has subsequently indicated that the global ructions could delay further tightening of US monetary policy.

Stocks

The Asia Pacific gauge dropped 1 per cent as of 2:11pm Tokyo time, with the Topix tumbling to a 1.6 per cent loss after earlier jumping more than 1 per cent.

Chinese stocks fluctuated after the benchmark index posted its biggest rally in three months, with commodity producers declining.

“Stay cautious,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about US$7.2 billion, said by phone.

“Don’t be afraid to reduce risk because we expect things to be volatile from here—it’s a relatively defensive message. There are a lot of economic issues that need to be worked through. We’ve been incrementally paring back” risk positions, including equities, he said.

A 4.2 per cent slump in Australia’s energy stocks led Australia’s S&P/ASX 200 Index as it declined 0.6 per cent. Woodside Petroleum Ltd., the nation’s second-largest oil and natural gas producer, tumbled 6.9 per cent after reporting a 99 per cent collapse in full-year profit amid the rout in energy prices. The S&P/NZX 50 Index in New Zealand advanced 0.1 per cent in a third straight day of gains.

Futures on the Standard & Poor’s 500 Index retreated 0.2 per cent after the benchmark capped its best two-day gain since August yesterday, rising 1.7 per cent as markets returned after a holiday Monday.

Currencies

The won fell to a more than five-year low as bets increased the Bank of Korea will cut its policy rate after one of seven board members called for a reduction when the central bank left its benchmark rate at a record-low 1.5 per cent yesterday.

The currency dropped 0.8 per cent to 1,226.65 a dollar after touching 1,226.80, the weakest level since July 2010. It’s retreated 4.4 per cent this year, the most among Asia’s emerging markets.

Malaysia’s ringgit dropped 1.4 per cent to 4.2115 per dollar, and touched a two-week low, as crude prices near the lowest since 2003 threaten the oil exporters’ finances. Indonesia’s rupiah slumped 0.8 per cent as 17 of 28 economists surveyed by Bloomberg forecast the nation’s central bank will lower the benchmark interest rate when they announce policy tomorrow.

The yuan headed for the biggest two-day decline in more than a month as the central bank’s fixing for the currency tracked an overnight advance in the dollar and official media voiced concern that capital outflows will increase.

Australia’s dollar was poised for its first two-day drop since mid-January, declining 0.3 per cent to 70.89 US cents. The New Zealand currency fell 0.2 per cent.

Commodities

West Texas Intermediate crude added 0.6 per cent to US$29.19 a barrel, after falling 1.4 per cent last session on news of the Saudi-Russia pact.

The agreement, which doesn’t include Iran, is the first significant cooperation between OPEC and non-OPEC producers in 15 years, and Saudi Arabia said it’s open to further action. The two countries agreed to a deal, which includes Qatar and Venezuela, that fixes output at January levels.

Given no cuts in production were agreed to by Russia and Saudi Arabia, “the market’s response to the agreement suggested they are underwhelmed,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients.

“Oil prices at current levels are profitable for very few and so we find ourselves in that classic commodity equation: the best cure for low prices is low prices.”

Gold climbed 0.6 per cent to US$1,207.28 an ounce following a three-day drop.

Nickel dropped 1.2 per cent to US$8,240 a metric ton on the London Metal Exchange to lead base metals lower. Copper slid 0.4 per cent and tin retreated 0.6 per cent.

Bonds

Treasury benchmark 10-year notes halted a two-day decline before the Fed issues the minutes of its last policy meeting, when officials refrained from raising interest rates. The yield on the debt fell two basis points to 1.75 per cent.

Yields on similar-dated Australian notes declined three basis points to 2.49 per cent. — Bloomberg