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Asian markets subdued as crude oil resumes slide

MSCI's broadest index of Asia-Pacific shares outside Japan were effectively unchanged, and looked set for a loss of around 12 per cent for the year.

twitter-logo Reuters   Tokyo     Last Updated: December 29, 2015  | 08:30 IST
Asian markets subdued as crude oil resumes slide
Japan's Nikkei lost 0.3 per cent and South Korea's KOSPI fell 0.4 per cent. Australian stocks bucked the trend and rose 0.4 per cent. Photo: Reuters

Asian stocks were subdued on Tuesday, with Japanese and South Korean equities slipping, after crude oil prices resumed their slide and cooled investor sentiment.

MSCI's broadest index of Asia-Pacific shares outside Japan were effectively unchanged, and looked set for a loss of around 12 per cent for the year.

Japan's Nikkei lost 0.3 per cent and South Korea's KOSPI fell 0.4 per cent. Australian stocks bucked the trend and rose 0.4 per cent.

On Monday, prices of both Brent and US crude dropped more than 3 per cent, reversing a brief rebound and dragging US energy shares .SPNY down 1.8 per cent as the worst performing of the major S&P sectors.

Brent was at $36.60 a barrel, near an 11-year low of $35.98 struck last week.

The Dow dipped 0.1 per cent and the S&P 500 lost 0.2 per cent overnight after trading resumed following the Christmas break, but activity is expected to remain thin until after the long New Year holiday weekend.

In currencies, the dollar edged down 0.1 per cent to 120.33 yen, within striking distance of a two-month low of 120.05 struck late last week.

The greenback has been sapped by profit taking after the Federal Reserve this month hiked interest rates for the first time in nine years. The currency market will wait for the Fed to send fresh signals about when the second rate hike could take place in 2016 for potential dollar support.

The euro nudged up 0.1 per cent to $1.0977.

The dollar fared better against its Canadian counterpart, which was weighed down as crude oil prices weakened again.

The Canadian dollar stood little changed at C$1.3894 to the greenback after losing 0.7 per cent overnight. The loonie fell to an 11-year low of C$1.4003 against the dollar earlier this month.

"We are looking for USD/CAD to break 1.40 and head towards 1.45 in the first half of 2016. The oil industry is experiencing its biggest downturn since the 1990s and prices could fall another $10 a barrel before bottoming," wrote Kathy Lien, managing director at BK Asset Management.

The Australian dollar gained 0.2 per cent to $0.7262 while the New Zealand dollar rose 0.2 per cent to $0.6859. Both currencies were confined to a narrow range ahead of the year's end.

 

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