Business International

Asia stocks subdued as oil resumes fall

Image: Employees of the Tokyo Stock Exchange (TSE) work at the bourse in Tokyo August 26, 2015. REUTERS/Yuya Shino

By Shinichi Saoshiro
TOKYO (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 percent for the year.

Japan’s Nikkei lost 0.3 percent and South Korea’s KOSPI fell 0.4 percent. Australian stocks bucked the trend and rose 0.4 percent.

On Monday, prices of both Brent and U.S. crude dropped more than 3 percent, reversing a brief rebound and dragging U.S. energy shares down 1.8 percent 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 percent and the S&P 500 lost 0.2 percent 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 percent 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 percent 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 percent 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 percent to $0.7262 while the New Zealand dollar rose 0.2 percent to $0.6859. Both currencies were confined to a narrow range ahead of the year’s end.

(Editing by Kim Coghill)

Copyright 2015 Thomson Reuters. Click for Restrictions.

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