Asian markets plod along as investors await US jobs report
Oil prices have tumbled after hitting six-month highs just last week (DAVID MCNEW)
Hong Kong (AFP) – Asian markets limped into the weekend Friday with energy firms again taking a hit from a plunge in oil prices, while investors look ahead to the release of key US jobs data later in the day.
Observers said there may have been some caution setting in after a report suggesting the long-running trade talks between China and the United States had hit a snag.
With optimism fuelled by a broadly strong earnings season beginning to fade, dealers are taking their cash off the table after a strong start to the year, while analysts noted May is a traditionally weak month for equities.
Energy firms were once again in the firing line, dropping in tandem with crude prices owing to worries about rising supplies and falling demand.
Brent has tumbled around 6.5 percent and WTI is off more than seven percent from six-month highs touched just last week, taking another hit Thursday from data showing a surge in US stockpiles and output.
The commodity had been rallying in recent weeks on the back of output cuts led by OPEC and Russia (OPEC+) unrest in Libya, the political crisis in Venezuela and hopes for the China-US trade talks.
But analysts pointed out that a would-be coup in Caracas has fizzled, tensions in Libya have eased and the major producing countries appear to be rolling back on commitments to turn off the taps.
“Expectations are dwindling that OPEC+ will be able to deliver on any extension on production cuts,” said Edward Moya, senior market analyst at OANDA.
“Even if they do show optimism at the next… meeting on May 17th, many will not expect an extended cut agreement to have the same effect as the first one. Right now the path of least resistance for oil remains to the downside.”
– Trade talks questions –
Hong Kong-listed CNOOC dived more than two percent and PetroChina almost one percent, while Woodside Petroleum shed 1.1 percent in Sydney and Santos sank two percent.
On broader stock markets, Hong Kong fell 0.7 percent, Singapore gave up 0.5 percent and Seoul sank 0.8 percent with Wellington and Jakarta also lower.
However, Sydney and Taipei edged up slightly while Manila rallied 0.8 percent.
Attention is now on the release Friday of US non-farm payrolls data that will provide a fresh snapshot of the world’s top economy. The figures come after the head of the Federal Reserve disappointed markets by saying recent weak inflation was “transitory”, denting hopes the bank would consider an interest rate cut this year.
A strong jobs report would reinforce Jerome Powell’s view that the economy was broadly healthy and all but kill off any chance of a cut in the near future.
There is also some unease after a report in Chinese media speculated that negotiators from China and the US had hit an impasse in the trade talks, citing the fact there were few details from their most recent talks in Beijing this week.
“Whilst these are just initial reports, clearly anything that suggests the US and China won’t agree a deal will rattle investors,” said Neil Wilson, chief market analyst for Markets.com.
However, National Australia Bank pointed out that the comments contradicted reports by Politico and CNBC saying a deal could come as soon as next Friday.
– Key figures around 0300 GMT –
Hong Kong – Hang Seng: DOWN 0.7 percent at 29,731.82
Shanghai – Composite: Closed for holiday
Tokyo – Nikkei 225: Closed for holiday
Euro/dollar: UP at $1.1177 from $1.1173 at 2050 GMT
Pound/dollar: DOWN at $1.3042 from $1.3034
Dollar/yen: DOWN at 111.43 yen from 111.50 yen
Oil – West Texas Intermediate: DOWN 12 cents at $61.69 per barrel
Oil – Brent Crude: DOWN 27 cents at $70.48 per barrel
New York – Dow: DOWN 0.5 percent at 26,307.79 (close)
London – FTSE 100: DOWN 0.5 percent at 7,351.31 (close)
Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.