Asia: Markets follow US, Europe down as energy firms tumble

[HONG KONG] Asian stocks sank Friday in line with hefty losses in Europe and New York, with energy firms taking a hit from falling commodities prices and fears about the global economy.

Shares in Europe and the United States ended deep in the red Thursday, with weak earnings reports exacerbating another slide in the price of oil and other commodities that suggest the world economy is struggling.

The black gold tumbled Thursday after the US Department of Energy said commercial inventories last week surged more than expected, indicating weak demand. That came after a separate report by the American Petroleum Institute Tuesday showed inventories jumped by six million barrels.

Prices have halved since peaking in June last year above US$100, hit by tepid demand in a weak global economy, and a supply glut in the face of near-record output levels.

In early Asian trade US benchmark West Texas Intermediate was down 20 cents and Brent was five cents higher at US$44.11 at around 0130 GMT. On Thursday WTI ended US$1.18 a barrel down and Brent sank US$1.75.

Adding to the pain is a growth slowdown in China, the world's biggest energy user, which has also impacted on other commodities such as copper and iron ore.

Among Asian energy firms, Sydney-listed miner BHP Billiton and Rio Tinto gave up more than two per cent while Origin was 4.6 per cent lower.

And in Hong Kong struggling mining giant Glencore tumbled 6.5 per cent, following a 7.6 per cent slump in its London-listed shares. Sinopec's Shanghai-listed stock lost 1.5 per cent.

The selling put downward pressure on stock markets across the region, with Hong Kong, which jumped 2.4 per cent Thursday, and Sydney worst affected. Tokyo and Shanghai pared some early losses but remained stuck in negative territory.

All three main indexes on Wall Street, as well as London, Paris and Frankfurt, ended sharply lower and lost more than one per cent.

The dollar edged up against its major rivals after several top Federal Reserve officials cautiously hinted at a US interest rate hike at next month's policy meeting, although traders remained wary with global markets still fragile.

However, they mostly also said the central bank should be cautious, while New York Fed President William C. Dudley adding that any increases should be minimal, citing still-weak rises in prices.

"After liftoff commences, I expect that the pace of tightening will be quite gradual," he said, according to Bloomberg News.

"In part, that is because monetary policy is not as stimulative as the low level of the federal funds rate might suggest." Bets on a hike surged - sending the dollar rocketing - after data last Friday showed a better-than-forecast jump in new jobs in October and a fall in the unemployment rate to a seven-and-a-half year low.

AFP