[SYDNEY] Asian share markets slipped early Wednesday as a relentless slide in oil prices wiped out an attempted rally on Wall Street and dealt a fresh blow to risk appetite.
US crude wallowed at its lowest since 2003 after the world's energy watchdog warned the market could "drown in oversupply". US crude futures shed another 49 US cents to a new trough at US$27.97 in early trade, while Brent crude was quoted at US$28.76 a barrel.
Equity markets reacted by reversing some of Tuesday's rare gains, and MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.3 per cent.
Japan's Nikkei fell 0.7 per cent, while Australian stocks lost 0.4 per cent.
Singapore's Straits Times Index was down 1.7 per cent at 2,594.78 as of 10:05 am.
China's main stock indexes opened lower after the country's securities regulator announced a new batch of initial public offerings, despite the central bank's pledge to ease short-term liquidity.
The CSI300 index fell 0.4 per cent while the Shanghai Composite Index lost 0.4 per cent. The Hang Seng index in Hong Kong dropped 1.9 per cent.
Late on Tuesday, China's securities regulator said it had approved seven initial public offerings under new listing rules that took effect on Jan 1. The regulator said the IPOs would have limited impact on the market, as under the new rules, pre-paid capital is no longer needed from investors during the IPO subscriptions process.
Also on Tuesday, China's central bank pledged to inject more than 600 billion yuan (S$131.16 billion) to help ease a liquidity squeeze expected before the Lunar New Year in early February.
Wall Street overnight saw early gains erased by the slump in US crude. The Dow ended up 0.17 per cent, while the S&P 500 rose a single point and the Nasdaq eased 0.26 per cent.
The S&P energy sector alone sank 2.17 per cent. Oil at 12-year lows stokes fears of deeper losses for energy companies and the risk some may fail to pay their debts.
Tom Porcelli, chief US economist at RBC Capital Markets, noted that polls of investors showed investors were more bearish on Wall Street than at any time since mid-1987."Perhaps characterizing the recent bout of negativity as being 'pervasive' is an understatement," he wrote in a note.
Yet history showed that sentiment was darkest before the dawn."When investor pessimism reached these levels outside of an economic recession, the market was higher one quarter hence in every single instance, and up by an average of 6.4 per cent," said Mr Porcelli.
Currency markets were relatively calm with the US dollar index stuck at 99.107 having barely budged for six straight sessions. Risk aversion saw the dollar soften on the yen to 117.48, while the euro edged up to US$1.0921.
One loser was sterling which carved out a seven-year low after Bank of England Governor Mark Carney said he had no "set timetable" for raising interest rates.
The pound sank as deep as US$1.4127, before steadying around US$1.4164.