Published On: Tue, Apr 5th, 2016

Asia markets sink as oil slide hits energy firms


Asia markets sink as oil slide hits energy firms

Energy firms led losses in Asia on Tuesday as oil prices extended their recent losses, while most stock markets tumbled again and analysts questioned whether a recent rally may have run its course.

Regional investors were handed a negative lead from Wall Street, where the plunge in crude also hammered oil-linked plays and all but wiped out Friday’s jobs-fuelled gains.

Hopes that an upcoming meeting between the world’s top oil producers would lead to an output freeze were dealt a blow last week when kingpin Saudi Arabia said it would only do so if other major countries followed suit.

With Iran, which has only just been allowed to resume exports, saying it is unlikely to take such action yet there are now concerns no agreement will be met — exacerbating a global glut at a time of weak demand.

Both main crude contracts fell Tuesday in Asia, with Brent down 0.5 percent at $37.50 and West Texas Intermediate 0.8 percent lower at $35.40, having broken above $40 a barrel in March.

Woodside Petroleum fell 3.6 percent in Sydney while Santos was three percent lower and BHP Billiton gave up 3.5 percent.

And Hong Kong-listed CNOOC sank 3.6 percent while PetroChina was 2.8 percent lower. Tokyo’s Inpex dived 5.6 percent.

The losses were mirrored across regional stock markets, with the Nikkei in Japan losing 2.2 percent by the break owing to a surge in the yen against the dollar, which hurts exporters.

– ‘Head fake’ –

After the Federal Reserve’s comments last week that US interest rates would remain unchanged until the second half of the year, Friday’s strong jobs and manufacturing data were not enough to fire up the greenback.

Adding to the yen’s rally is a flight to safety by investors spooked by the dive across share markets.

“There is a bit of a risk-off theme at present with oil prices down and equities in negative territory in the US,” Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore, said. “This has seen demand for euro and yen which tend to do well in a risk-off environment.”

Hong Kong shed 1.8 percent, Shanghai eased 0.2 percent, Sydney was 1.4 percent lower and Seoul gave up one percent.

World markets enjoyed a bounce in March, after suffering sharp losses in January-February, but Craig Sterling, head of US equity research at Pioneer Investments in Boston, said there is a growing feeling further gains may be limited.

“There’s a big divergence in opinion right now over whether this rally is a head fake or not and that’s the big question,” he told Bloomberg News.

“Stocks have gone up on not a lot of volume and we’re kind of at an inflection point right now. It’s going to be an interesting quarter because a lot of companies are not going to have a great quarter.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 2.2 percent at 15,769.81 (break)

Shanghai – Composite: DOWN 0.2 percent at 3,003.63

Hong Kong – Hang Seng: DOWN 1.8 percent at 20,133.95

Euro/dollar: UP at $1.1400 from $1.1394 on Monday

Dollar/yen: DOWN at 110.90 yen from 111.28 yen

New York – Dow: DOWN 0.3 percent at 17,737.00 (close)

London – FTSE 100: UP 0.3 percent at 6,164.72 (close)

News Source Yahoo

About the Author

Syed Ammar Alavi

- is Lahore (Pakistan) based journalist & writer with 25-year experience in print, wire and broadcast forms of journalism. His major fields of interest are politics, film,tv,sports, climate change and technology