Oil gain fails to halt fresh slide on Asia stock markets

AP and AFP

HONG KONG/TOKYO — A modest recovery in oil prices provided some respite for Asian energy firms Wednesday but stock markets extended losses while mainland China’s ongoing economic woes cast a pall over the region’s trading floors. The cost of the black gold has plunged by almost a 10th since Friday’s refusal by the OPEC oil exporters’ group to agree a ceiling on output despite oversupply and anaemic demand across the globe. The impact of the weak commodity price environment was also made stark Tuesday when U.S. mining giant Anglo American said it would scythe almost two-thirds of its workforce and reduce investment by about US$1 billion.

“We believe that the current crude oversupply in the global market will persist over the coming years, reinforcing our flat outlook for oil prices over 2015-2017,” BMI Research said in a market commentary. A global supply glut, weak demand and the growth slowdown in China have combined with soaring production to send crude slumping more than 60 percent over the past 18 months. European Stocks Find Footing European shares made modest gains in early trading Wednesday as oil prices stabilized after their recent rout and Japan reported stronger-than-expected machinery orders. The United Kingdom’s FTSE 100 rose 0.4 percent to 6,159.36 and France’s CAC-40 gained 0.6 percent to 4,711.71. Germany’s DAX added 0.3 percent to 10,706.80. Wall Street looked likely to follow Europe’s lead. Dow futures were up 0.2 percent at 17,576.00 and S&P 500 futures rose 0.2 percent to 2,062.40.

Volatility in the junk bond market is largely being driven by the collapse in oil prices, Angus Nicholson of IG said in a commentary. With no relief in sight, “the debt-laden and marginal energy players are increasingly likely to be pushed to the verge of bankruptcy. This has driven up junk bond yields and in turn weighed on the equity markets,” he said.

Tokyo closed 1 percent off, Sydney fell 0.3 percent while Taipei, Singapore and Kuala Lumpur were also in negative territory. Hong Kong lost 0.5 percent. However, Shanghai edged up by the end of the day after a slightly better-than-forecast inflation reading for November and on hopes officials will unveil fresh measures to support the economy.

Key figures around 0830 GMT Tokyo – Nikkei 225: DOWN 1.0 percent at 19,301.07 (close) Hong Kong – Hang Seng: DOWN 0.5 percent at 21,803.76 (close) Shanghai – composite: UP 0.1 percent at 3,472.44 (close)

New York – Dow: DOWN 0.9 percent at 17,568.00 (close)