Asian stocks tracked Wall Street lower early Friday, with risk-off sentiment in full swing amid sharp falls in the price of commodities.
Crude prices hit two-and-a-half-month lows on Thursday after the US government reported a stockpile build four times above market expectations. West Texas Intermediate crude was last seen 0.3 percent lower at $ 41.62 a barrel in early Asian trade.
Meanwhile, gold tumbled to its lowest level since 2010, depressed by expectations that the Federal Reserve is on track for a rate liftoff in December for the first time in nearly a decade. Copper also fell to its weakest level in more than six years, hurt by a strong dollar and persistent concerns over China’s economy.
“We blame China’s economic data for the latest drop in commodity prices, [especially] in copper. The close relation between the CRB index and the US dollar broke down in June. The subsequent 9.6 percent decline in the CRB looks outsized against the 2.0 percent rally in the dollar index. We infer that China growth uncertainty displaced dollar as the driver of commodity prices,” Tim Condon, head of research for Asia at ING Financial Markets, wrote in a note.
As such, major U.S. averages slumped more than 1 percent each overnight, as investors eyed several speeches from Fed officials that hinted at an interest-rate hike next month. Wall Street posted its worst day since September 28, with the S&P 500 ending lower year-to-date for the first time since October 22 and the Dow Jones Industrial Average off more than 250 points.
Mainland stocks down
Share markets in China nursed a weak open, with the benchmark Shanghai Composite slipping 0.5 percent.
Energy-related plays and airlines diverged on the back of declining oil prices; PetroChina and Sinopec tanked nearly 1 percent each, but shares of China Southern Airlines soared 3.1 percent.
Huaneng Power International plans to sell HKUSD 5.7 billion (USD 736 million) of new H-shares, raising capital to repay bank loans and for working capital. Shares of the listed unit of China’s biggest power generator Huaneng Group jumped 2.4 percent in Shanghai, but its Hong Kong-listed stock declined 6.6 percent.
Hong Kong’s Hang Seng index fell 1.8 percent, a day after outperforming the region with a near 2 percent rally, as investors await the city’s third-quarter gross domestic product (GDP) due at 4.30pm local time.
Economic growth for the July-September period likely ticked up just 0.1 percent on-quarter, the report from Moody’s Analytics said, down from a seasonally adjusted 0.4 percent in the three months to June. On a year-on-year basis, Hong Kong’s economy is expected to grow 2 percent, compared with 2.8 percent in the second quarter.
“Weak mainland demand is dragging on the small open economy, pushing down export growth. Rising house prices and low oil prices should support consumption growth, though offset somewhat by the decline in the stock market,” analysts wrote.
Nikkei loses 0.7 percent
Japan’s Nikkei 225 index halved losses by mid-morning trade.
Toshiba plummeted nearly 8 percent after the embattled electronics giant confirmed its US nuclear unit Westinghouse booked losses in 2012 and 2013.
Hefty losses among index heavyweights also contributed significant downward pressure; SoftBank declined 2.2 percent, while Fanuc and Fast Retailing notched down 1.5 and 0.7 percent respectively.
In the oil-related space, large-cap Inpex shaved off 1.2 percent.
ASX skids 1.6 percent
Australian equities came off the day’s lows, but a meltdown among resources plays kept the S&P ASX 200 index near its lowest level since October 1.
Santos led the fallers, down 6.9 percent, while Woodside Petroleum and Oil Search declined about 2 percent each.
Gold producers such as Newcrest Mining doubled losses to 3.2 percent by mid-morning trading, while major miners such as BHP Billiton and Rio Tinto declined nearly 3 percent each.
Brazilian PresidentDilma Roussef said on Thursday that the country’s environmentalregulator would fine the Samarco Mineracao iron ore mine USD 66.2million for a burst last week that killed seven people. Themine, as well as joint-owners BHP and Brazil’s Vale, could alsobe sued, said a Reuters report citing senior Roussef officials.
Investors also sold off banking shares, with Commonwealth Bank of Australia losing more than 2 percent. Australia and New Zealand Banking and National Australia Bank fell 1.7 and 1.5 percent respectively.
Kospi eases 0.9 percent
South Korea’s Kospi index was taken lower to a near six-week trough by lagging refiners and automakers.
SK Innovation and S-Oil made losses of 1.7 and 0.6 percent respectively, with lower energy prices denting appetite for these stocks.
Kia Motors underperformed fellow automakers, down 2.2 percent. Hyundai Motor and Ssangyong Motor slipping 1.6 and 0.3 percent respectively.
Bucking the downtrend, Lotte Chilsung Beverage and Kosdaq-listed CJ E&M rallied more than 1 percent each, following news that their stocks have been included in the MSCI Korea Index.
KLCI dips 0.3 percent
Malaysia’s economy likely slowed further in the July-September quarter, as exports showed no signs of recovery amid a slower-growing China and as the implementation of a goods and services tax (GST) in April continue to weigh on domestic consumption, according to an November 9 report by Affin Hwang Investment Bank.
As such, GDP growth likely expanded 4.8 percent in the third quarter from a year earlier, analysts predicted, below second quarter’s 4.9 percent which marked the Southeast Asian economy’s slowest pace of growth since the third quarter of 2013.
The benchmark FTSE Bursa Malaysia KLCI index nudged down in early trade on Friday.