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Asian stock markets trade cautiously; China CPI eyed

Asian markets traded cautiously in the morning session on Wednesday as the slide in oil prices continued to weigh on investor sentiment.

Oil prices remained low during US trading hours as a result of a global supply glut.

US West Texas Intermediate (WTI) crude futures settled 14 cents or 0.37 percent lower at USD 37.51 a barrel. Globally traded Brent futures were down 44 cents at USD 40.28 a barrel, hovering near the lowest level since February, 2009.

Evan Lucas, market strategist at spreadbetter IG, said in a note, “OPEC would not cut or even cap production; this has come to fruition as expected. The fallout from the Vienna convention is the group has signaled that it’s each to their own.”

“If we are honest, it’s not in OPEC’s interest to balance the oil market on the supply side. This will fall to the likes of Canada, Norway, Russia and the US,” he added.

US markets closed in the red. The Dow Jones Industrial Average dropped 162.51 points or 0.92 percent to 17,568. The S&P 500 was down 13.48 points or 0.65 percent at 2,063.59 while the Nasdaq ended near flat, down 3.57 points or 0.07 percent at 5,098.24.

Nikkei down despite strong economic data; Kospi trades higher

Japan posted two consecutive days of positive economic data. On Tuesday, the revised third quarter gross domestic product (GDP), the broadest measure of economic health, number showed the economy was not in technical recession as indicated by the preliminary data.

On Wednesday, October core machinery orders, a measure of capital spending in the economy, rose unexpectedly by 10.7 percent on-month, against a Reuters poll of economists that predicted a 1.5 percent decline. Core machinery orders rose 10.3 percent on-year, also beating expectations.

Market reaction, however, was modest as the spillover effect of low commodity prices pushed the Nikkei 225 down 61 points or 0.31 percent at 19,432.

Manufacturing stocks traded lower despite the positive economic data. Shares in Komatsu and Hitachi Construction were down between 0.6 and 0.8 percent.

Japanese blue chips were mostly down, with shares in Sony and Mitsubishi Electric seeing losses of more than 1 percent each.

Elsewhere, the Nikkei reported that Japan’s fiance ministry would ramp up issuance of 40-year government bonds in the next fiscal year to reduce the risk of debt-servicing costs eating into the country’s finances.

In South Korea, markets traded in positive territory, with the Kospi up 5 points or 0.26 percent at 1,954.

Shares in Lotte Shopping traded 4 percent higher after news broke that its parent company, Lotte Group, would consider listing its Japanese confectionery business in the Japan stock market.

South Korean blue chips traded mixed with shares in Samsung Electronics up by 0.4 percent.

Australian market open in the red

The ASX 200 traded flat, down 1 point or 0.02 percent at 5,107.

The energy sector saw a bounce back in the morning session, up by over 1 percent. Energy stocks gained between 0.6 and 2.72 percent despite lower oil prices. Shares in Santos was up 2.72 percent, Woodside Petroleum was up 1.9 percent and Oil Search traded 1.6 percent higher.

Gold stocks were up between 0.84 and 5.15 percent, as gold traded at $ 1,075 an ounce.

Miners and resources producers were mostly in the red, though, as industrial metal prices were mixed. Iron ore traded at $ 38.65 a tonne.

Iron ore producer Fortescue was down 0.83 percent, Atlas Iron down 8.82 percent, while Mount Gibson and BC Iron were in positive territory.

Australia’s two biggest miners Rio Tinto and BHP Billiton traded mixed; Rio Tinto was down 1.23 percent while BHP pared early losses and traded 0.88 percent higher. Overnight one of the world’s biggest miners, Anglo American, suspended dividend payments and announced it would cut 85,000 jobs over the next several years as low commodities prices weighed on revenue.

Lucas wrote, “The fall out of Anglo-American will spread through the big five,” including BHP Billiton, which said last month it would maintain its progressive dividend policy.

On the data front, Australia will release its October home loans number, and China its November inflation data.

Elsewhere, Myanmar will launch the country’s first stock exchange as part of its rapid modernization efforts. The Yangon Stock Exchange is a reported $ 24 million investment, funded by state-owned Myanmar Economic Bank, Daiwa Securities and Japan Exchange Group, which operates the Tokyo Stock Exchange.


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