Regional stocks got off to a weaker start after Wall Street closed lower on Friday, as falling oil prices compounded investor nervousness on expectations for the first US rate hike in nearly a decade. On Wall Street, the Dow fell 1.76% Friday, while the S&P 500 lost 1.94% and the Nasdaq was down 2.21%. The US Federal Reserve's rates decision in the middle of this week (December 16-17) will be watched closely around the world.
Investors worried that a weakness in commodities signals a broader slowdown. The IEA said in its latest report published Friday that the first signs of a slowdown in global oil demand had been seen in the fourth quarter of 2015. The US benchmark West Texas Intermdiate (WTI) for January delivery fell to $35.27 a barrel on the New York Mercantile Exchange today. The contract decreased $1.14 to $35.62 on Friday, the lowest settlement since February 2009. Brent for January settlement was down as much as 1.3% at $37.44 a barrel on the London-based ICE Futures Europe exchange on Monday. It slid US$1.80 to $37.93 on Friday, the lowest close since December 2008. The European benchmark crude was at a premium of $2.22 to WTI.
Sliding oil and iron ore prices are obviously a concern for the mining and energy sector with no sign yet of either production cuts or a demand uptick even after the prices having crashed,
The US central bank is expected to give the go-ahead to a small increase in borrowing costs for the first time in nearly a decade, a decision that has kept markets on edge for months. Markets are currently pricing in around an 80% chance of rates lift-off. But, lower crude oil prices will encourage deflationary conditions and interestingly, not only may it lead to further stimulus in Eurozone but also it will be one of the major points of discussion during the Fed meeting as inflation is inversely proportional to interest rates - which may lead to Fed rethink on adopting a hawkish policy.
Among Asian bourses
Japan market hits six weeks low
The Japanese share market tumbled to six weeks low, as risk sentiments remain under pressure due to a sliding crude oil and iron ore price, yen appreciation against the dollar, and an impending US interest rate decision. Total 32 out of 33 TSE industry groups decent, with the day's notable losers comprised Mining, Securities & Commodities Futures, Oil & Coal Products, Machinery, Nonferrous Metals, Iron & Steel, and Insurance issues. The 225-issue Nikkei Stock Average tanked 347.06 points, or 1.8%, to 18883.42, a lowest level not seen since November 2, 2015, when it closed at 18683.24. The Topix index of all Tokyo Stock Exchange First Section issues dropped 21.63 points, or 1.4%, to 1527.88.
Shortly before markets opened, the Bank of Japan published its closely watched Tankan business sentiment survey. The report showed the country's biggest manufacturers were in a cautious mood during the last quarter of the year, despite a modest pick-up in the world's third largest economy.
Shares of export-oriented issues declined the most in the Tokyo, hit by yen appreciation against other currencies. Jittery investors have moved into the Japanese yen, which is seen as safe-haven in times of uncertainty and turmoil. But a stronger yen weighs on the profitability and competitiveness of Japanese firms doing business abroad, which dampens appetite for their shares.
Toyota Motor Corp shares dropped 2.9% to 7463 yen, Sony Corp lost 0.8% to 3016 yen, and Mazda Motor Corp sank 3.7% to 2474 yen. Subaru automaker Fuji Heavy Industries, which relies on North America for 60% of sales, lost 1.9% to 4910 yen. Mobile carrier SoftBank Group fell 2.6% to 6100 yen and Uniqlo-operator Fast Retailing was down 3.1% to 44520 yen. Energy explorer Inpex slumped 2.9% to 1148 yen as oil prices sit at multi-year lows.
Bridgestone Corp fell 1.7% to 4229 yen after the tyre giant upped its bid for US auto service chain Pep Boys, after a competing offer from US investor Carl Icahn threatened to derail an agreed takeover.
Australia market dives below 5K level
The Australian equity market declined to lowest level in more than two-months, dragged down by risk aversion selloff for fifth consecutive session, following losses on Wall Street and a further decline in commodity prices at the end of last week. Meanwhile, worries about the effect of the Fed's first rate hike in nearly a decade also weighed on sentiment. All ASX industry groups, expect gold, tumbled with declines were led by shares of energy, materials, property trusts, financials, and industrial issues. At the close, the benchmark S&P/ASX 200 index stumbled 100.90 points, or 2.01%, to finish at 4928.60 points, a lowest level not seen since September 29, 2015, when it closed at 4918.40. The ASX 200 shed 2.37% last week.
Shares of energy and companies were major drag on the Sydney market due to the continued rout in the commodity prices. Global miner BHP Billiton declined 3.3% to A$16.63, its lowest closing share price in more than a decade. Rival Rio Tinto was off 2% to A$42.18, while smaller iron ore player Fortescue was down 2.5% to A$1.795.
Oil and gas producer Woodside was down 2.5% to A$26.36 after the global benchmark Brent crude price fell to $37.63 a barrel. Oil Search was down another 5.5% to A$5.86, adding to steep falls after Woodside withdrew a takeover approach last week. Origin Energy was down 4.5% to A$4.47. Santos shed 4.8% to A$3.34 its lowest close in over two decades.
Shares of major banks were down, with the major banks were lost over 2%. Australia & New Zealand Banking Group sank 2.1% to A$25.68, National Australia Bank 2.3% to A$27.94, Commonwealth Bank of Australia 1.9% to A$77.44, and Westpac Banking Corp 2.6% to A$30.66. Shares in Suncorp Group tumbled 9.8% to A$11.77 after the insurer warned that its first half margins will be hit by the continued cost of settling natural disaster claims and the sinking Australian dollar.
China stocks rebound after economy shows signs of steadying
The Mainland China stock market finished session sharply higher, due to bottom fishing on recently battered stocks after slightly better than expected Chinese industrial production growth data out over the weekend. All 10 industry categories on the main section advanced, with gainers being led by financials, materials, industrials, and energy issues. The Shanghai Composite Index surged 2.51%, or 86.09 points, to close at 3520.67. The Shenzhen Composite Index, which tracks stocks on China's second exchange, gained 2%, or 43.82 points, to close at 2239.68. The ChiNext Index, which tracks China's NASDAQ-style board of growth enterprises, rose 1.42%, or 37.97 points, to close at 2709.26.
China's activity data were stronger than expected in November, with factory output growth picking up to a five-month high, signaling that a flurry of stimulus measures from the government may have put a floor under a fragile economy. Factory output grew an annual 6.2% in November, data from the National Bureau of Statistics (NBS) showed, quickening from October's 5.6% and beating expectations of 5.6%. Growth in China's fixed-asset investment, one of the main drivers of the economy, rose 10.2% in the first 11 months, unchanged from the gain in January-October, and higher than an expected 10.1% rise. Retail sales grew an annual 11.2% in November the strongest expansion this year, compared with 11% in October, and higher from expected 11.1% growth in November.
Shares of material producers registered the steepest gain among 10 industry groups, after Andrew Michelmore, chief executive officer of MMG, statement that Copper prices will recover next year as cutbacks and higher costs create a tighter market. As per reports, Chinese smelters making copper, zinc, nickel and stainless steel have announced alliances to collectively cut output. Jiangxi Copper Co surged 6.4% to 16.39 yuan, Wuhan Iron & Steel Co. 3.9% to 3.47 yuan, and Aluminum Corp. of China 3.4% to 5.11 yuan.
Hong Kong market tumbles
The Hong Kong stock market declined more than ten weeks low, as investors feel the pinch from the commodities rout and worry about the fallout from an expected US Federal Reserve policy rate hike. The losses were widespread, with the big banks, energy, and material stocks among the hardest hit. The benchmark index opened down 400 points at 21,063. Within first five minutes, it dropped to an intra-day low of 21,010. But the firmer mainland equity markets helped the local market to trim losses late afternoon. The benchmark Hang Seng Index declined 154.20 points, or 0.72%, to 21309.85 points, a lowest level since September 30, 2015, when the benchmark's closed at 20846.30 points. The Hang Seng China Enterprises Index, benchmark measure of performance of mainland China enterprises, rose 7.91 points, or 0.08%, to 9315.91 points. Turnover marginally increased to HK$77.49 billion from HK$68.39 billion on Friday.
Shares of Companies in which Fosun Group owns majority shares resumed trading on Monday with losses. Fosun International (00656) said its chairman Guo Guangchang is currently assisting in certain investigations carried out by Mainland judiciary authorities. Guo may continue to take part in decision makings of Fosun's major matters via appropriate means. Fosun International was down 9.5% to HK$12.08, while Fosun Pharmaceutical was down 12.1% to HK$21.90.
China Ocean Shipping Group companies slid after China regulator has nodded the restructuring of the China Ocean Shipping (Group) (COSCO) and the China Shipping (Group). Two of China Ocean Shipping's units -- China Cosco Holdings slid 27.9% to HK$3.56 and Cosco Pacific plunged 17.3% to HK$8.29, while China Shipping's unit China Shipping Development Co. advanced8.2% to HK$5.94.
Indian stocks retain positive zone
Indian stock market moved within a narrow range in positive zone in afternoon trading. At 1.15 pm, Sensex was up 108 points at 25,153. Nifty was up 37.60 points at 7648.05. The market breadth indicating the overall health of the market was positive.
Shares related to auto counter remained under pressure after the National Green Tribunal (NGT) on Friday ordered immediate ban on registration of diesel-run cars in the national capital.
The share price of Hotel Leelavenutre gained 1.8% after it has received an approval from the Competition Commission of India (CCI) for sale of its Goa property. CCI approved acquisition of Hotel Leelaventure's Goa property by Malaysia-based MetTube.
Infosys rose 1% after the company said that it has made an investment of $3 million in WHOOP Inc., an early stage company in the US offering a performance optimization system for elite professional sports teams
The latest data showed that inflation based on the wholesale price index (WPI) remained in negative zone in November 2015. WPI stood at negative 1.99% in November 2015 compared to a reading of negative 3.81% for October 2015.
Elsewhere in the Asia Pacific region: Taiwan's Taiex index fell 0.8% to 8053. South Korea's KOPSI sank 1% to 1929. Malaysia's KLCI slipped 0.8% to 1627. Singapore's Straits Times index lost 0.9% at 2809. Indonesia's Jakarta Composite index shed 1.1% to 4343. New Zealand's NZX50 dropped 0.6% to 6035.
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