HONG KONG, May 3 — Asian markets were mixed heading into the weekend today 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 that 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 per cent and WTI is off more than seven per cent from six-month highs touched just last week, taking another hit yesterday 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 per cent and PetroChina 0.4 per cent, while Woodside Petroleum shed 0.9 per cent in Sydney and Santos sank more than two per cent.
On broader stock markets, Hong Kong rose 0.3 per cent in the afternoon, Taipei added 0.8 per cent and Mumbai put on 0.3 per cent with Manila slightly higher.
But Seoul sank 0.7 per cent with Sydney, Wellington and Jakarta also lower. Singapore was barely moved.
In early trade London rose 0.3 per cent, while Paris and Frankfurt were flat.
Attention is now on the release today 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 0720 GMT
Hong Kong — Hang Seng: UP 0.3 per cent at 30,026.92
Shanghai — Composite: Closed for holiday
Tokyo — Nikkei 225: Closed for holiday
London — FTSE 100: UP 0.3 per cent at 7,371.24
Euro/dollar: DOWN at US$1.1163 from US$1.1173 at 2050 GMT
Pound/dollar: DOWN at US$1.3025 from US$1.3034
Dollar/yen: UP at 111.52 yen from 111.50 yen
Oil — West Texas Intermediate: DOWN five cents at US$61.76 per barrel
Oil — Brent Crude: DOWN 23 cents at US$70.52 per barrel
New York — Dow: DOWN 0.5 per cent at 26,307.79 (close) — AFP
