Asian markets fluctuated on Thursday (Aug 11) following a slump in the oil price driven by fresh indications of oversupply.
The dollar rose against some Asia Pacific currencies but gains were capped as traders are still awaiting clearer signals on the timing of a possible US interest rate hike, with expectations that the Fed will move cautiously.
The New Zealand dollar bucked the trend, rising against the greenback after the country’s central bank slashed interest rates to a record low of 2.0 per cent and said further easing might be necessary.
South Korea on Thursday opted to keep its key rate unchanged at 1.25 per cent for August but the central bank governor held out the prospect of another reduction.
Japanese financial markets were closed for a national holiday.
“The biggest risk to the market at the moment is a huge drop in oil prices,” James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg news.
Oil prices have been fluctuating since entering a “bear” market last week, falling more than 20 percent from recent highs above the US$50 a barrel seen in early June and closing below $40 a barrel for the first time since April.
Weekly figures released Wednesday by the US Energy Department showed that crude stocks remained high last week at 523.6 million barrels, up 0.2 per cent from the prior week and still more than 15 per cent above the same point last year.
At about 0830 GMT, West Texas Intermediate was trading at US$41.25 while Brent was at US$43.68.
“Oil is increasingly pulling back towards the US$40 a barrel level again and many in the markets are concerned that the shorts may even be looking for prices to drop down towards the US$35 level,” Angus Nicholson, a strategist at IG Markets, said in a note.
EYES ON CHINA
Investors are also awaiting the release of more Chinese economic data, with the government due to release economic indicators – including industrial output and retail sales – this week.
Figures released Tuesday showed China’s producer prices fell in July at their slowest rate in nearly two years, fuelling hopes the end of a painful slowdown could be in sight for the Asian powerhouse.
Shanghai fell 0.2 per cent dragged down by falls in smaller companies.
Sydney ended down 0.6 per cent, while Taipei tumbled 0.8 per cent and Manila lost 0.9 per cent.
Wellington was flat after the rate reduction which was in line with market expectations.
Seoul rose while Hong Kong stocks also gained 0.4 per cent, spurred by financial companies.
But energy firms around the region took a hit, with Sinopec in Hong Kong dropping 0.9 per cent, Shanghai-listed Shaanxi Coal falling 4.8 per cent and Woodside Petroleum in Sydney retreating 1.1 per cent.
In early European trade, London was down 0.6 per cent, while Frankfurt climbed 0.1 per cent and Paris was flat.
– Key figures at around 0830 GMT –
Tokyo – Nikkei 225: closed for holiday
Shanghai – Composite: DOWN 0.5 per cent 3,002.637 (close)
Hong Kong – Hang Seng: UP 0.4 per cent at 22,580.55 (close)
Euro/dollar: DOWN at US$1.1144 from US$1.1181 Wednesday
Pound/dollar: DOWN at US$1.2953 from $1.3015
Dollar/yen: DOWN at ¥101.24 from ¥101.27
New York – DOW: DOWN 0.2 per cent at 18,495.66 (close)
London – FTSE 100: DOWN 0.6 per cent at 6,827.05
Courtesy : channelnewsasia
