Crude oil prices plunged amid fears of a price war after OPEC failed to strike a deal with its allies on production cuts. In the afternoon of Asian trading hours, the international benchmark Brent crude futures contract fell 22.91% to $34.90 per barrel. U.S. West Texas Intermediate (WTI) crude futures also fell sharply by 24.71% to $31.08 per barrel.
The worries over oil prices come as investors have already been jittery over the global spread of the coronavirus that has infected more than 106,000 and taken at least 3,639 lives worldwide, according to the latest figures from the World Health Organization.
The Italian government ordered Sunday a large-scale lockdown in the northern part of the country, including Milan, as infection cases in the country surged to over 7,300. The situation also worsened in the United States, with New York state declaring a state of emergency.
Japanese Finance Minister Taro Aso on Monday stressed the need to closely monitor market moves but declined to comment on the possibility of Japan stepping into the foreign exchange market to stem the yen's rise.
Investors grapple with the potential economic damage caused by fractured supply chains, travel bans and the disruption of daily life. The infectious disease is an exogenous factor that economists and investors are finding difficult to model. There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.
Shares of oil refiners and trading houses were hit by a sharp fall in crude futures on reports that Saudi Arabia plans to boost oil output after the collapse of Organization of the Petroleum Exporting Countries production limit talks with Russia. Oil refiner JXTG plunged 8.2% to 374.00 yen and Japan Petroleum Exploration tumbled 12.7% to 1,974 yen. Among trading houses, Mitsubishi shed or 4.9% to 2,471.50 yen and Mitsui slid 6.9% to 1,617.00 yen.
Export-related issues were battered on the yen's sharp rise against the dollar, which cuts their overseas profits when repatriated. Toyota Motor dropped 4.4% to 6,495 yen, Honda Motor sagged 7.1%,to 2,496.50 yen and Nissan Motor slid 8.2% to 389.20 yen.
ECONOMIC NEWS: Japan GDP Revised Down To -7.1% On Year In Q4- Japan's gross domestic product saw a downward revision to -7.1% on year in the fourth quarter of 2019 after last month's preliminary reading suggested a decline of 6.3%, the Cabinet Office said on Monday. On a seasonally adjusted quarterly basis, GDP sank 1.8%, down from -1.6 in the preliminary reading. Nominal GDP fell 1.5% on quarter and down from -1.2%. The GDP deflator gained 1.2% on year.
Japan Posts Current Account Surplus Of Y612.3 Billion In January- Japan's current account surplus came in at 612.3 billion yen in January, the ministry of Finance said on Monday, up 6.6% on year and up from 524.0 billion yen in December. The trade balance reflected a deficit of 985.1 billion yen following the 120.7 billion yen surplus in the previous month. The adjusted current account saw a surplus of 1,626.8 billion yen, down from 1,852.0 billion yen a month earlier.
CURRENCY NEWS: The Japanese yen, often seen as a save-haven in times of economic uncertainty, traded at 102.37 per dollar after seeing levels above 108 last week.
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