TOKYO — Asian stock markets sank across the board Thursday as pessimistic sentiment following sustained weakness in oil prices and a dive on Wall Street prevailed over data showing economies on the mend.
KEEPING SCORE: Japan’s benchmark Nikkei 225 dived 2.7 per cent to close at 17,240.95. South Korea’s Kospi was down 0.9 per cent at 1,900.01. Hong Kong’s Hang Seng lost 0.7 per cent to 19,797.34 but the Shanghai Composite rebounded 1.3 per cent to 2,987.07. Other regional markets were also lower, falling in Taiwan, Singapore, Australia and Indonesia.
FRAYED NERVES: Oil prices at 12-year lows and the volatile start to 2016 in China’s stock and currency markets have unleashed a torrent of negativity among investors. Some analysts say a correction in stock prices is inevitable after multi-year gains fostered by loose monetary policy but also point out the underlying economic picture is reassuring. China’s trade improved in December, U.S. job creation has remained strong, and Australia, which is one of the countries highly vulnerable to China’s slowdown, reported another month of strong jobs growth in December.
THE QUOTE: “When sentiment rules, data can only play a secondary role,” said Michael McCarthy, chief strategist at CMC Markets in Sydney. “The lift in China exports in December not only smashed bearish expectations of a fall but spoke directly to the idea that the economy in China tanked” in the last quarter of 2015. “Yet these facts barely dented global investor psyches.”
YEN CLIMB: The Wall Street jitters sent Japanese shares lower including giant exporters such as automakers Toyota and Honda, as well as Bridgestone and trading companies. The yen has been sought as a safe haven in the absence of confidence in other currencies recently, and that’s usually a negative for Japanese companies, which rely on exports to boost earnings. The dollar has dropped from about 121.50 yen in mid-December to 117.50 yen lately.
WALL STREET: The Dow lost 364.81 points, or 2.2 per cent, to 16,151.41 on Wednesday. The S&P 500 fell 48.40 points, or 2.5 per cent, to 1,890.28. It was the worst day for the index since Sept. 28. The Nasdaq slid 159.85 points, or 3.4 per cent, to 4,526.06. The drop over the first eight trading days of 2016 represents the worst start to a year in the history of both the S&P 500 and the Dow.
ENERGY: Falling oil prices are adding to the fears about a global slowdown. Investors fear that U.S. oil futures hovering at $30 a barrel could force some oil and gas companies to go bankrupt. Benchmark U.S. crude edged up 29 cents to $30.77 a barrel in electronic trading on the New York Mercantile Exchange. The contract made a slight gain in New York on Wednesday. Brent crude, a benchmark for international oils, fell 7 cents to $30.21 a barrel in London.
CURRENCIES: The dollar rose to 117.75 yen from 117.41 yen in the previous trading session. The euro fell to $1.0875 from $1.0883.
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