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Update: Asian stocks sink, euro near nine-year low

Tuesday, January 6, 2015 - 18:47
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Tokyo's Nikkei led an Asian share slump on Tuesday following painful losses in New York and Europe, with fears sparked by the global slump in oil prices and the Greek political crisis.

[HONG KONG] Tokyo's Nikkei led an Asian share slump on Tuesday following painful losses in New York and Europe, with fears sparked by the global slump in oil prices and the Greek political crisis.

The euro sat near nine-year lows as the uncertainty in Greece raised the prospect it could leave the eurozone.

Investor fears intensified after oil prices fell below the psychological $50 a barrel mark owing to a global supply glut, weak demand and a stronger dollar.

Tokyo plunged 3.02 per cent, or 525.52 points, to 16,883.19, Seoul lost 1.74 per cent, or 33.30 points, to close at 1,882.45 and Sydney fell 1.57 per cent, or 85.53 points, to 5,364.8.

Hong Kong fell 0.99 per cent, or 235.91 points, to 23,485.41 but Shanghai was flat, recovering early losses to edge up 0.93 points to 3,351.45 - a five-and-a-half-year high.

The first full week of the new year got off to a traumatic start for dealers as they bet that a January 25 general election in Greece would see a victory for the left-wing Syriza party.

Markets fear the party will roll back austerity measures required under the IMF-EU bailout of the country, which could in turn lead it to exit the eurozone.

The year is "barely three trading days old and already the two biggest themes that were predicted to affect the markets this year are making headlines: oversupply of commodities and the eurozone," Evan Lucas, a markets strategist in Melbourne at IG Ltd., wrote in an email to clients, according to Bloomberg News.

At the weekend Der Spiegel quoted German government sources as saying they consider Greece's exit "almost inevitable" if Syriza wins the snap poll.

Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble had come to consider Athens' removal from the bloc would be "manageable", the magazine said.

However, investors were spooked and on Monday Greek stocks sank more than five per cent, while the Paris, Madrid and Milan exchanges fell more than three per cent.

The Dow dived 1.86 per cent Monday, the S&P 500 fell 1.83 per cent and the Nasdaq lost 1.57 per cent.

In currency trade the euro sank to $1.1864 Monday, its lowest level since March 2006. On Tuesday the single currency had slightly recovered, buying $1.1935.

The euro was meanwhile at 142.23 yen against 142.74 yen in US trade and well down from the 144.58 yen Friday.

Adding to downward pressure is increased speculation that the European Central Bank would buy eurozone government bonds to counter deflation risks.

The dollar was at 119.15 yen on Tuesday, compared with 119.61 in New York on Monday and also well down from 120.46 yen Friday.

A morning pick-up in oil prices could not be sustained after slipping below US$50 for the first time in more than five years in New York.

US benchmark West Texas Intermediate for February delivery rose back above the psychological level in Asia but gave up those gains and extended its losses as the day wore on.

The contract was down 54 cents at US$49.50, while Brent crude for February fell 59 cents to US$52.52.

The cost of crude has plunged since June as supplies outstrip demand with key consumer China slowing down, the eurozone struggling and the dollar, in which it is priced, strengthening.

A decision late last year by the Organization of the Petroleum Exporting Countries (OPEC) to maintain output despite the glut has also cut into prices.

"The fundamentals of oil are unlikely to change in the first half of this year, which will see oil bedding down into its bear market for months to come," IG's Mr Lucas said.

Gold was at US$1,210.89 an ounce, compared with US$1,196.40 on Monday.

In other markets: - Mumbai fell 3.07 per cent, or 854.86 points, to 26,987.46.

Oil & Natural Gas Corp fell 5.89 per cent to 332.45 rupees, while Hindustan Unilever rose 1.89 per cent to 775.15 rupees.

- Bangkok closed down 0.38 per cent, or 5.67 points, to 1,477.58.

State owned oil and gas company PTT jumped 2.54 per cent to 323.00 baht while Bangkok's Bumrungrad Hospital, a popular medical tourism destination, rose 0.72 per cent to 139.50 baht. Siam Cement dipped 1.78 per cent to 442.00 baht.

- Malaysia's main stock index shed 20.04 points or 1.15 per cent to close at 1,716.58.

Malayan Banking lost 2.22 per cent to 8.80 ringgit, Public Bank slipped 1.23 per cent to 17.60, while DKSH Holdings added 5.56 per cent 5.70 ringgit.

- Singapore closed down 1.39 per cent, or 46.33 points, to 3,281.95.

Oil rig maker Keppel Corp fell 4.26 per cent to S$8.32 while DBS Bank dipped 1.05 per cent to S$19.83.

- Taipei fell 2.43 per cent, or 225.77 points, to 9,048.34.

Taiwan Semiconductor Manufacturing Co shed 4.30 per cent to NT$133.5, while Hon Hai Precision Industry lost 3.10 per cent to end at NT$84.5.

- Wellington gave up 0.74 per cent, or 41.22 points, to 5,561.38.

Telecoms firm Chorus fell 0.19 per cent to NZ$2.64 and ANZ bank lost 1.62 per cent to NZ$33.40.

- Manila was flat, notching up 1.11 points to 7,277.74.

Philippine Long Distance Telephone fell 2.23 per cent to 2,810 pesos, Energy Development gained 1.76 per cent to 8.65 pesos, while Megaworld rose 3.95 per cent to five pesos.

AFP