HONG KONG – Asian shares dropped on Thursday, with energy stocks taking a hammering from a slide in oil prices while a stronger dollar piled pressure on commodity producers, AFP reports. Energy stocks dragged Wall Street and European equities lower on Wednesday after US oil prices dipped below $40 a barrel for the first time in five sessions.
Crude posted its biggest loss in six weeks after news US commercial stocks surged by 9.36 million barrels last week, almost three times the prediction of analysts polled by Bloomberg News. Bombings in Brussels that killed 31 people and injured more than 200 also hit tourism stocks, adding to jitters about economic growth already rippling through world markets.
Chinese stocks opened lower, the mining and energy-rich Sydney benchmark tumbled 1.10 percent, while Tokyo and Seoul also lost ground. “Those expecting a tightening (oil) market are still just hoping,” Kyle Cooper, director of research with IAF Advisors and Cypress Energy Capital Management, told Bloomberg News.
“We’ll eventually see a tightening, but there is no evidence that is happening yet.” Oil prices fell further on Thursday, with US benchmark WTI down 12 cents at $39.67 a barrel while Brent, a more global measure, was flat at $40.47. Piling further pressure on commodities, the dollar advanced after a Federal Reserve official said the US could raise interest rates as early as next month.
“You get another strong jobs report, it looks like labour markets are improving, you could probably make a case for moving in April,” said James Bullard, president of the St Louis Fed. Comments from several Fed members have fuelled expectations the bank may start to take a more bullish approach than signalled last week, when it held interest rates steady.
A stronger greenback makes it more expensive for investors using other currencies to buy dollar-priced commodities, and raw materials from copper to gold fell on Wednesday. “Fed officials this week reminded the market that they still want to move forward with the rate hikes,” Mark Lister, head of private wealth research at Craigs Investment Partners, told Bloomberg News.
“Investors have been looking for a reason to pull back and this is one… Concerns remain about how sharp the slowdown is in China. You still have deflationary pressures and geopolitical risks.” Oil has taken a battering over concerns world demand cannot keep pace with a glut of supply as economic growth slows, particularly in major consumer China.
Moves by members of the OPEC producer group to cap production — fresh talks are planned in Qatar on April 17 — have pushed prices up a third from the 13-year lows they flirted with this year. But few are predicting a major recovery any time soon, and the fresh weakness hurt energy companies in Asia on Thursday.
PetroChina fell almost three percent after it reported profits tumbled almost 70 percent in 2015, from the previous year, to 35.5 billion yuan — their lowest level since 1999. CNOOC fell 1.85 percent in Hong Kong and global energy and minerals giant BHP slumping 4.09 percent in Sydney. Commodities traders suffered, with Japan’s Mitsui & Co down 7.44 percent after it forecast its first loss since 1947.
Shares in Australia’s ANZ Bank lost 5.43 percent after the lender forecast its bad debt charges from resource companies will be A$100 million higher than predicted.
– Key figures at 0230 GMT –
Tokyo – Nikkei 225: FLAT at 17,041.89 (break)
Shanghai – Composite: DOWN 0.57 percent at 2,993.63
Hong Kong – Hang Seng: DOWN 0.71 percent at 20,468.39
Euro/dollar: DOWN at $1.1171 from $1.1183 on Wednesday
Dollar/yen: UP at 112.77 yen from 112.43 yen
New York – Dow: DOWN 0.5 percent at 17,502.59 (close)
London – FTSE 100: UP 0.1 percent at 6,199.11 (close)