Mon, 24 Feb 2020

Oil price weakness undermines Asian stocks

By Jay Jackson, The Tokyo News.Net
14 Nov 2018, 17:20 GMT+10

SYDNEY, Australia – Continued pressure on oil prices kept stocks in check across Asia on Wednesday.

Oil slid 7% on Tuesday, and prices were still sliding on Wednesday as fears about global growth continued to mount.

The positive news which broke late Tuesday that the UK and the European Union had struck a basis on which a deal on Brexit could be struck, and improving prospects of a breakthrough in U.S.-China tensions over tariffs, had heartened some traders, however it is clearly not carrying over to stock prices.

"The markets would have reacted more positively to U.S.-China trade and Brexit-related headlines a few months ago," Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities in Tokyo told Reuters Thomson.

"But currently there is more focus on the possibility of both the U.S. and Chinese leaders maintaining their tough stance, with a compromise eluding them, and Brexit bogging down. Market sentiment is clearly cooling down."

Despite the sentiment, stocks in Asia closed mixed. The worst performer surprisingly was on the ASX. The Australian All Ords, from the opening bell sold off sharply, and stayed weak throughout the day. At the close, the All Ords had lost 100.30 points or 1.69% at 5,822.30.

In Tokyo, the Nikkei 225 gained 35.96 points or 0.16% at 21,846.48.

The Hong Kong Hang Seng by the close had dropped 138.44 points or 0.58% to 25,654.43, while in China the benchmark Shanghai Composite at the close had declined 22.64 points or 0.85% to 2,632.24.

On currency markets the U.S. dollar clawed back a tad of its losses from overnight. In early European trading on Wednesday the euro was trading at 1.1295. The British pound was quoted at 1.3005. The Japanese yen was changing hands at 113.89, and the Swiss franc at 1.00676. The Canadian dollar remained weak at 1.3237.

The Australian and New Zealand dollars were little changed and remained well bid at 0.7220 and 0.6778 respectively.

Overnight on Wall Street, stocks were directionless with little news for investors to weigh up.

General Electric caused some interest. The company announced it would sell its oil services provider Baker Hughes for up to $4 billion. This reversed the weakness of recent days and sent the stock soaring. It closed up 7.8%.

At the close of trading Tuesday, the Dow Jones industrials were down 100.69 points or 0.4% at 25,286.49.

The Standard and Poor's 500 declined just 4.04 points or 0.15% to 2,722.18.

The tech-laden Nasdaq Composite inched up 0.01 of a point to 7,200.88.


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