FX:Asia stocks decline as high oil prices weigh; Nikkei dips 0.15%
Forexpros - Asian stock markets were broadly lower on Monday, as high oil prices raised concerns over its impact on the fragile global economy, though shares in Japan remained close to a seven-month high on persistent yen weakness.
During late Asian trade, Hong Kong's Hang Seng Index dropped 1.15%, Australia’s ASX/200 Index retreated 0.9%, while Japan’s Nikkei 225 Index eased down 0.15%.
Crude oil prices traded close to a nine-month high of USD109.28 a barrel in New York, while Brent oil surged above USD124 in London, fuelling concerns that the economic recoveries in the U.S. and Europe could get derailed and potentially hurt Asian growth.
The world economy is “not out of the danger zone” amid fragile financial systems, high public and private debt and rising oil prices, International Monetary Fund Managing Director Christine Lagarde said in a statement after a weekend meeting of finance ministers from the Group of 20 nations in Mexcio.
In Hong Kong, shares in airliner Cathay Pacific Airways tumbled 4.35% on concern higher fuel costs would weigh on profits. Hong Kong-listed shares of Air China plunged 6.2%, while China Southern Airlines lost 4.1%.
Shares in the financial sector also contributed to losses after the G-20 meeting failed to make progress on increasing the size of the IMF’s lending capacity.
China Construction Bank shares fell 2%, Bank of China slumped 1.8%, while insurance giant Ping An retreated 1.7%.
Elsewhere, the Nikkei settled close to the previous session’s seven-month high, as the yen dropped to the lowest level since May against the U.S. dollar, boosting the outlook for export earnings.
The yen has weakened significantly since the Bank of Japan’s surprise decision to boost its economic stimulus program two weeks ago.
Consumer electronic giants Sony and Sharp saw shares gain 1.15% and 3.2% respectively, while automakers Honda and Mazda rose 1.6% and 1.45% apiece.
In Australia, shares came under pressure as traders shrugged off a political victory by Prime Minister Julia Gillard, who defeated her predecessor Kevin Rudd in leadership challenge for control of the ruling Labor party and the nation.
Financials were lower following downgrades Friday by Fitch ratings agency. ANZ Banking Group slumped 0.55% and Commonwealth Bank of Australia declined 0.5%.
Looking ahead, the outlook for European stock markets was downbeat. The EURO STOXX 50 futures pointed to a loss of 0.5%, France’s CAC 40 futures shed 0.55%, London’s FTSE 100 futures declined 0.35%, while Germany's DAX futures pointed to a 0.6% drop.
Later in the day, Germany’s parliament was to hold an extraordinary session to vote on Greece’s second bailout, while the U.S. was to publish industry data on pending home sales.
