(Reuters) – Asian share markets slipped while the euro hit a nine-year trough on Wednesday as collapsing oil prices and worries about the world economy drove skittish investors into the arms of safe havens such as the yen and sovereign debt.
From Japan to Germany to Australia, government borrowing costs reached all-time lows as oil fell 10 percent in just two days and investors wrestled with the risk of global deflation.
Data from the euro zone due later on Wednesday are expected to show the first annual fall in consumer prices since 2009, piling pressure on the European Central Bank to launch all-out quantitative easing at its next policy meeting on Jan 22.
“We expect the ECB to announce a sovereign QE programme on 22 January, and the first purchases to probably start in the following week,” said Citi economist Guillaume Menuet.
“Given the sizeable decline in market-based inflation estimates and the likelihood of a negative print for the December flash estimate, we doubt that the ECB will choose to wait,” he added. “Investors would probably react very negatively to a “no QE” announcement.”
Investors were busy selling the euro in anticipation of more money-printing by the central bank, pushing the single currency to a fresh low of $1.1842 EUR= in Asian trade.
The euro also dropped to 140.58 yen EURJPY=R, a low last seen in early November, while the dollar eased to 118.58 yen JPY= and further away from December’s peak of 121.86.
The general mood of risk aversion took a toll on equities, with Japan’s Nikkei .N225 falling 0.3 percent after suffering the largest one-day drop in 10 months the previous session.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS eased 0.3 percent while Australian stocks .AXJO fell a further 0.7 percent.
On Wall Street, the three major stock indexes fell for a fifth straight session. For the S&P 500 it was the longest losing streak since late 2013.
The Dow .DJI shed 0.75 percent, the S&P 500 .SPX 0.9 percent and the Nasdaq .IXIC 1.29 percent.
Brent LCOc1 cost just $50.90 a barrel having shed almost 10 percent so far this week, whileU.S. crude CLc1 was stuck at $48.07, after plumbing an April 2009 low of $47.55.