SINGAPORE: Japanese rubber futures slid on Thursday as recession fears and dipping oil prices weighed but the market remains in limbo, watching financial regulators’ next moves closely.

Osaka Exchange’s rubber contract for September delivery finished 4.5 yen, or 2.1%, lower at 209.8 yen ($1.60) per kg, reversing gains in the previous session. * The rubber contract on the Shanghai futures exchange for September delivery fell 145 yuan to finish at 11,660 yuan ($1,694.94) per tonne. Japan’s benchmark Nikkei average closed 1.22% lower.

“The market is stable but lacking direction,” said a Singapore-based trader. “Recent ISM statistics indicate a slowdown in the US economy. Tonight’s non-farm payrolls (NFP) report will be crucial in determining the future (moves) of the Federal Reserve.”

“While the Chinese economy is recovering, data suggests work is still in progress.” japan’s economic output ran below full capacity for the 11th straight quarter in October-December, Bank of Japan (BOJ) data showed on Wednesday, suggesting that conditions for ending ultra-low interest rates have yet to fall into place.

“BOJ policy changes, if any, would only mean a stronger yen and hence, lower rubber prices,” the trader said. Oil fell on Thursday as weak US economic data raised concerns over a potential global recession and demand reduction, but benchmark prices were headed for a weekly advance after OPEC+ announced further output cuts and US oil stocks dropped. Lower oil prices incentivise manufacturers to shift to synthetic rubber derived from oil, pressuring the natural rubber market.

Asian stocks and US equity futures sank on Thursday while bonds and the safe-haven US dollar and Japanese yen were bid as mounting evidence of a US slowdown fuelled worries about a possible global recession.

The front-month rubber contract on Singapore Exchange’s SICOM platform for May delivery last traded at 134.8 US cents per kg, down 0.7%.