Asian shares were flat on Wednesday, as weak Chinese export data offset a brightening energy sector outlook and an expected delay in interest rate hikes by the US Federal Reserve.

The MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.1 per cent, amid subdued risk appetite as markets braced for weak May trade data out of China due today.

Japan’s Nikkei extended losses to trade 0.3 per cent lower, weighed down by a stronger yen.

“Global equities are firmer, but it is not indicative of an uptake in risk appetite. The upmove was mostly driven by higher oil prices,” Bernard Aw, market strategist at IG, wrote in a note. “Therefore, Asia may not see much of a risk-on session today, as market participants remain cautious.”

China stocks

Chinese shares also slipped, with the CSI 300 and the Shanghai Composite indices both down 0.7 per cent. Hong Kong's Hang Seng slid 0.4 per cent.

Chinese dollar-denominated exports declined 4.1 per cent in May from a year earlier, compared with the expected drop of 3.6 per cent. Imports fell 0.4 per cent, less than the expected 6 per cent. China’s trade surplus is forecast to hit $50 billion in May.

On Wall Street, the US S&P 500 Index rose 0.1 per cent to 2,112, less than 20 points away from its record closing high marked in May last year.

The advance was led by 2.1 per cent gains in energy shares as oil prices jumped more than 1 per cent to hit 2016 highs on expectations of domestic stockpile draws and worries about supply shortfalls from attacks on Nigeria's oil industry.

A report by trade group American Petroleum Institute (API), released after Tuesday’s close showed a crude draw of 3.6 million barrels, larger than expectations of 2.7 million barrels, supporting the market.

Crude futures

US crude futures rose 0.1 per cent to $50.43 per barrel, near its Tuesday high of $50.53, a level last seen in October.

Global benchmark Brent futures was little changed at $51.47, close to the eight-month high of $51.55 per barrel hit earlier in the session.

Fed rate hike

Investors further trimmed expectations of Fed rate hikes as they assessed Friday’s employment report that showed new hires sharply dropped in May.

Data published on Tuesday confirmed US non-farm productivity fell in the first quarter on a surge in labour-related costs, suggesting companies may have had to slow hiring after their hiring earlier this year outpaced revenue growth.

“Output is not increasing as much as an increase in employment, hence we have a fall in productivity,” said Shuji Shirota, head of macroeconomic strategy at HSBC Securities. “If employment stops increasing and we still have no growth in productivity, that would be a worrying sign.”

Treasury yields

The 10-year US Treasuries yield was last at 1.7108, after falling back to 1.713 per cent overnight, testing strong support at around 1.70 per cent.

In Europe, German bond yields hit a record low of 0.045 per cent on Tuesday as investors sought a safe haven ahead of Britain's referendum on EU membership.

The British pound was off Monday's three-week low but remained volatile. It traded at $1.4542, compared with Monday's low of $1.4352.

Dollar

The dollar also licked its wounds near four-week lows after the job data quashed expectations of a Fed rate hike in the next couple of months.

The dollar index stood at 93.732, the lowest level in almost a month.

The euro gained 0.1 per cent to $1.13690 while the yen rose 0.6 per cent to 106.735 per dollar.

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