April 5, 2016 8:29 pm
HONG KONG: Energy firms led
losses in Asia 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.
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 reached—exacerbating a
global glut at a time of weak demand.
Both main crude
contracts fell Tuesday in Asia, with Brent down 0.4 percent at $37.51 and West
Texas Intermediate 0.5 percent lower at $35.51, having broken above $40 a
barrel in March.
Woodside Petroleum
fell 4.2 percent in Sydney while Santos was 5.3 percent lower and BHP Billiton
ended down 3.3 percent.
And Hong Kong-listed
CNOOC sank 3.7 percent while PetroChina was 3.4 percent lower in the afternoon.
Tokyo’s Inpex dived 4.2 percent by the close.
The losses were
mirrored across regional stock markets, with the Nikkei in Japan losing 2.4
percent owing to a surge in the yen to an 18-month high against the dollar,
which hurts exporters.
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 1.7
percent and Sydney was 1.4 percent lower while Seoul gave up 0.8 percent.
However, Shanghai
jumped 1.5 percent as the worries about China’s economy that had led to the
early 2016 bloodbath ease, with better-than-forecast manufacturing figures
Friday at home and in the US providing support.
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.”
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