You are here
Oil prices slump further, Tokyo hit by yen strength
[HONG KONG] Oil prices extended their losses on Monday, adding to worries about the global economy, while Tokyo led most Asian markets lower as a stronger yen hurt Japan's exporters.
With Wednesday's US Federal Reserve interest rate hike well in the past, analysts said concerns about the global economy returned and traders were now looking ahead to the next increase.
However, while markets will begin winding down for the Christmas break Friday there are some key economic figures due for release this week, including US economic growth and home sales as well as Japanese inflation and spending.
Crude continued to slide as an ongoing supply glut showed no sign of easing, with figures Friday showing an increase in the number of US rigs drilling, fuelling worries output will continue apace.
US benchmark West Texas Intermediate lost 0.6 per cent to US$34.50 a barrel and Brent sank one percent to US$36.50 in early Asian trade.
Prices have slumped by almost a fifth since December 4 when the OPEC oil producers' group decided against limiting its production, despite tepid demand and the supply glut.
The commodity has sunk more than 60 per cent from above US$100 in summer 2014 and are now at levels not seen since the financial crisis.
"There hasn't been any significant signs of a pick-up in demand and we haven't seen any meaningful cuts to production," Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News.
"Nothing has really changed in the oil market over the past couple of months apart from the price." Japan's Nikkei suffered hefty selling pressure as the dollar retreated after Wednesday's Fed-fuelled rally, hitting exporters whose goods are made more expensive overseas.
The greenback slipped to 121.17 yen on Monday, well below last week's high above 123 yen touched after the US rate rise. The dollar was also down against the euro.
Tokyo-listed Toyota and Fast Retailing, which operates the Uniqlo clothing brand, each shed more than two percent.
Scandal-hit conglomerate Toshiba lost more than nine percent following a weekend report in the leading Nikkei business daily that it will likely record a fiscal year net loss of about US$4 billion.
In a statement Monday, Toshiba said it would hold a board meeting later in the day and discuss "structural reform".
The 140-year-old company was this year hit by revelations that executives systematically pressured underlings to inflate profits in a years-long scheme to hide poor results.
Tokyo's Nikkei stock index ended the morning session 1.7 per cent lower. Among other markets Sydney shed 0.4 per cent and Singapore was 0.5 per cent lower.
However, Hong Kong was up 0.4 per cent and Shanghai added 0.8 per cent. The losses tracked a sell-off in New York and Europe.