HONG KONG (AP) — Major Asian stock benchmarks sank Monday
after an effort by major oil producing nations to agree on production
cuts failed over the weekend.
Japan's Nikkei 225 stock index led the decline,
dropping 3.3 percent to 16,286.02 as a rising yen and quake-related
production halts added to investor worries. Hong Kong's Hang Seng index
lost 1.3 percent to 21,032.89 and the Shanghai Composite Index in
mainland China shed 1.5 percent to 3,031.00. South Korea's Kospi
retreated 0.3 percent to 2,008.28, while Australia's S&P/ASX 200
dipped 0.3 percent to 5,143.70. Taiwan's benchmark also fell while index
in Southeast Asia were mixed.
Oil prices rebounded slightly by midday in Asia after falling by nearly 7 percent after Iran stayed away from a weekend meeting in Qatar of 18 oil producing nations that had been expected to reach an accord on freezing production to support crude oil prices.
"Expectations for the talks to end with an agreement were high, and the lack of one damaged the credibility of future meetings to support the oil market," Bernard Aw of IG said in a commentary.
"Asia is set for a negative start to the week, given this development. Commodities are expected to be beaten back today, and this would have consequences for equities, especially energy and material counters," he said.
U.S. crude oil fell $1.89 to $38.47 a barrel in electronic trading on the New York Mercantile Exchange, down 4.7 percent. It sank to a low of $37.61 a barrel, down 6.8 percent before regaining some of that loss.
Oil prices rebounded slightly by midday in Asia after falling by nearly 7 percent after Iran stayed away from a weekend meeting in Qatar of 18 oil producing nations that had been expected to reach an accord on freezing production to support crude oil prices.
"Expectations for the talks to end with an agreement were high, and the lack of one damaged the credibility of future meetings to support the oil market," Bernard Aw of IG said in a commentary.
"Asia is set for a negative start to the week, given this development. Commodities are expected to be beaten back today, and this would have consequences for equities, especially energy and material counters," he said.
U.S. crude oil fell $1.89 to $38.47 a barrel in electronic trading on the New York Mercantile Exchange, down 4.7 percent. It sank to a low of $37.61 a barrel, down 6.8 percent before regaining some of that loss.
Oil-related stocks were off sharply, with China's offshore oil and gas producer CNOOC and refiner Sinopec both down about 3 percent in Hong Kong while commodity shares such as Australian mining giant BHP Billiton lost 3.2 percent.
The slide in oil prices also dragged down currencies of resource-dependent countries. The Australian dollar fell 0.7 percent to 76.7 cents while the dollar rose 0.9 percent to 3.94 Malaysian ringgit.
"The
collapse of the oil production freeze summit has caused a wave of
selling across the commodity block currencies at today's open," Stephen
Innes, senior trader at OANDA, said in a note to clients. "Traders will
be closely monitoring oil prices and the knock-on effect on global
equity markets. All of which should increase volatility and keep traders
on the edge of their seats for most of the (Asia-Pacific) session."
Oil
prices hit a 12-year low in January, dipping under $30 a barrel, but
had risen above $40 in recent days, buoyed by bullish talks surrounding
the Doha meeting.
While the deal's collapse
sets a downbeat tone for the start of the trading week, investors will
remain cautious as they await other news trickling out over the next few
days for hints on the global economy's health, including quarterly
earnings, U.S. housing data and a European Central Bank meeting.
"People
are just sitting on the sidelines still," said Andrew Sullivan of
Haitong Securities. "People are very wary of what they're going to do
with their money."
Investor
sentiment in Japan was also pressured as the yen hovered near its
strongest level in 18 months crimping the outlook for the country's
exporters. Meanwhile, two recent powerful earthquakes that struck
southern Japan in recent days forced Toyota Motor Corp. to suspend some
production because of disruptions to its parts supplies.
The dollar slipped 0.8 percent to 107.91 yen from 108.81. The euro was flat at $1.1282.
Major
U.S. stock benchmarks ended Friday with small losses but were up for
the week. The Dow Jones industrial average fell 0.2 percent to
17,897.46, the Standard & Poor's 500 index lost 0.1 percent to
2,080.73 and the Nasdaq composite index dipped 0.2 percent to 4,938.22.
Culled from AP
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