Asia loses steam as major markets trade lower
Asian stocks lost momentum Tuesday, trading mostly lower as the improved market sentiment which spurred a global rally Monday appeared to fade.
Chinese markets, which started trading at 9.30 a.m. HK/SIN time, stayed in negative territory in afternoon trade, with the main Shanghai composite index dropping 0.85 percent. The smaller Shenzhen composite fell 0.59 percent.
Japan’s benchmark Nikkei 225, which was up over 1 percent in early trade, gave up most of its gains to trade flat. The broader Topix index erased gains to trade down 0.28 percent. The Japanese yen remained strong against the dollar, with the dollar-yen pair remaining around the 112-handle at 112.44 as of 1.35 p.m. HK/SIN time.
Across the Korean Strait, the Kospi fell 0.14 percent.
Australia’s S&P/ASX 200 closed down 21.62 points, or 0.43 percent, at 4,979.60.
In Asian trade, U.S. crude futures for April delivery were down 1.89 percent at $32.76 a barrel as of 1.37 p.m. HK/SIN time. But overnight,oil prices rose again; U.S. crude futures for March delivery, which expired Monday after the close, settled up 6.21 percent.
Global benchmark Brent also fell 1.82 percent to $34.06 a barrel, after gaining 5.3 percent in overnight trade.
Energy plays across Asia gave up much of their early gains and traded mixed, with Santos closing down 1.18 percent, Woodside Petroleumlower by 0.11 percent, Japan’s Fuji Oil falling 1.39 percent and Inpexadding 1.20 percent.
Energy plays on the Chinese mainland were mostly lower, with China Oilfield dropping 0.60 percent.
Andres Jamie Martinez of Barclays said in a morning note that the oil price rebound overnight was “partially explained by the recent talks about an output freeze, but the price action looked more like a short squeeze in a nervous market.”
OPEC’s secretary general Abdalla Salem El-Badri said on Monday bothOPEC and non-cartel countries are willing to cooperate to find a solution to low oil prices.
In recent weeks, major oil producers, including Saudi Arabia and Russia, met in Doha and have said they are ready to freeze production at January levels if other producers do the same.
Iran, which returned to the international oil market after U.S.-led sanctions on the Persian state were lifted earlier this year, welcomed the deal. But it stopped short of saying it would itself freeze production at January levels. Instead, Iran’s deputy oil minister said Saturday thecountry will increase production soon.
In Japan, Takata shares retraced some losses to trade down 3.75 percent. Earlier, shares fell as much as 8.28 percent after Reuters reported U.S. regulators are examining if another 70 million to 90 million air bag inflators need to be recalled.
The airbag manufacturer has been embroiled in a long controversy over faulty airbags, leading to many major car manufacturers issuing recalls globally.
Down Under, miners were in focus after one of the world’s biggest miners slashed its dividend for the first time since 1988 in the wake of the collapse in commodities prices.
BHP Billiton reported a net loss of $5.67 billion for the first half of the 2016 financial year and cut its interim dividend by 75 percent to 16 cents, from 62 cents a share, well below analyst expectations of 31 cents.
The Big Australian has long been valued by investors for its reliable and rising dividend payments, but after rivals Rio Tinto and Glencore slashed their dividends, the markets had been expecting BHP to do the same.
Rob Brierley, head of research at Patersons Securities, told CNBC’s “The Rundown” that BHP had finally admitted the slump in commodities would last longer than the short term.
“They’ve made some interesting measures, probably in my view a bit too late,” he said. “I think the market’s going to like the fact that there’s clarity on the dividend and also the reduced capex forecast going forward.”
Despite the steep decline in its earnings numbers, BHP shares closed up 2.62 percent. Other miners were mixed, with Rio Tinto adding 1.43 percent, while Fortescue gave up early gains to close down 3.23 percent.
Shares of commodities trader Noble Group erased losses of as much as 4.05 percent to trade up 2.70 percent despite warning it will post a net loss in the fourth quarter and for the full-year 2015, after taking a $1.2 billion hit from adjustments as commodities prices continued to tank.
In Europe, sterling hit a seven-year low on Monday on rising concerns that Britain could leave the European Union, with a referendum set to be held on June 23.
Overnight, Wall Street ended higher, with the Dow Jones industrial average closing up 228.67 points, or 1.40 percent, at 16,620.66. TheS&P 500 was up 27.72 points, or 1.45 percent, at 1,945.50 and theNasdaq composite was up 66.18 points, or 1.47 percent, at 4,570.61.
Source: CNBC
