Asia: Markets dragged lower by tech, energy firms

[HONG KONG] Asian markets sank on Wednesday, extending the previous day's losses, with energy firms tracking a sell-off in commodities and technology firms facing further struggles.

The losses followed sharp drops across Europe and New York as Britain struggles to hammer out a Brexit deal with the European Union and traders remain cautious about US lawmakers' ability to push through tax cut measures.

A rally in global equity markets has run into headwinds in recent weeks as dealers wind down for the end of the year and the US probe into Russia's alleged election meddling sows uncertainty.

A key drag for Asia on Wednesday were copper prices, which sank more than four per cent in London, having already lost about 10 per cent over the previous week with analysts blaming a pick-up in the dollar on hopes for US tax cuts.

There are also worries about China's crackdown on borrowing-fuelled investing.

"The sentiment in China has turned less positive after the conclusion of the National Party Congress, as the deleveraging rhetoric has returned to the market, especially with regards to real estate speculation," TD Securities commodity strategist Ryan McKay told Bloomberg News.

"Worries of the deleveraging's impact on real estate and construction demand saw optimism for commodity demand reduced and prices retreat." Also, oil prices were hit by data showing a big rise in US inventories.

Sydney-listed miners Rio Tinto and BHP were all both down around two per cent, while energy giant Woodside Petroleum lost 0.2 per cent. CNOOC, Sinopec and PetroChina sank in Hong Kong while Inpex suffered a 1.7 per cent drop in Tokyo.

STERLING STRUGGLES

The losses hit wider markets. Tokyo ended the morning 0.9 per cent lower.

Hong Kong lost 0.6 per cent, leaving it more than five percent off its 10-year peak touched just over a fortnight ago.

Shanghai also slipped 0.6 per cent and Sydney was 0.2 per cent lower following weaker-than-forecast economic growth data, which also dragged the Australian dollar on expectations the country's central bank will not lift interest rates any time soon.

Singapore and Seoul both gave up 0.5 per cent, while Taipei shed more than one per cent and Wellington dropped 0.3 per cent.

Greg McKenna, chief market strategist at AxiTrader, said since the US tax cuts look set to be agreed, the fall in prices could be caused by a so-called "buying the rumour, sell the (almost) fact", mixed with profit-taking following a healthy run-up this year.

The tech sector, which has been the best performer this year, was again in the red on profit-taking and as dealers shifted to firms more likely to benefit from lower US taxes.

Tencent dived one per cent and AAC technologies was four per cent lower, with Samsung and Sony also taking a hard hit.

On currency markets the pound is in trouble with British-EU talks in limbo after the government's coalition partner dismissed Prime Minister Theresa May's position on the future of Northern Ireland's border with eurozone member Ireland.

Mrs May is expected in Brussels again this week to try to get an agreement that would let her move the talks on to trade.

Eyes are on Washington this week, where lawmakers must agree a fresh budget by Friday to avoid a painful government shutdown, while US jobs data is also due on same day.

AFP