Share

Asia stocks down as plunging oil prices hammer energy firms

Hong Kong - Asian energy firms extended a global sell-off on Wednesday, dragging regional equity markets, as oil prices continued to tumble on the back of warnings of slowing demand and rising stockpiles.

Both main contracts were down more than one percent as investors were spooked after the International Energy Agency (IEA) cut its forecast for crude consumption, saying recovering prices and a mild early winter were weighing on purchases.

The Paris-based group said the sector would likely be oversupplied in the last three months of the year and 2018, while the US industry body announced a huge jump in stockpiles last week.

The news comes after recent gains in crude fuelled by a production cut by the Opec cartel and a brewing crisis in the Middle East between Saudi Arabia and Iran.

"Global demand growth, with the extension of the production cut, were the two primary factors behind the significant increase we've seen, particularly in the last six months," Gene McGillian, a market research manager at US-based Tradition Energy, told Bloomberg News.

McGillian added that the forecast is "taking a little bit of the bloom off the rose".

The losses in oil prices - which follow Tuesday's 1.9% fall in WTI and 1.5% drop in Brent - battered Asian energy firms.

Among the biggest losers Tokyo-listed Inpex dived four percent, PetroChina in Hong Kong plunged 3.3% and Woodside Petroleum sank 2.4% in Sydney.

US tax worries

The sell-off filtered through to wider stock markets, which have been on a broad decline since hitting multi-year highs last week.

Tokyo was 0.9% down at the break, with a stronger yen and a slight slowdown in Japanese economic growth adding to the waning optimism. The Nikkei had ended at a quarter-century high last Thursday.

Hong Kong lost 0.7%, Shanghai shed 0.8%, Sydney was 0.3% off and Singapore gave up 0.6%. Seoul eased 0.3%, Manila dropped 1% and Taipei was 0.6% lower.

The retreat followed fresh losses on Wall Street, where all three main indexes have succumbed to profit-taking after last week hitting record highs.

US dealers are also concerned about Donald Trump's tax-cuts as Republican lawmakers struggle to agree on a unified plan, which has led to speculation the legislation could fail in a similar way to the healthcare overhaul.

On currency markets the euro held most of its gains after surging on Tuesday in response to better-than-expected German growth figures.

The single currency briefly broke above $1.18 in early trade before easing back slightly.

The pound, however, remains weak on uncertainty about the political future of Britain's Prime Minister Theresa May as her government struggles along with Brexit talks.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.90
+0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
+0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders