Asian stocks were mostly lower on Wednesday, tracking declines on Wall Street as crude oil extended losses after Saudi Arabia ruled out freezing production, saying market forces should be allowed to work.
Japan’s benchmark Nikkei 225 index lost 0.9 percent to 15,915.79 as investors seeking haven in the yen pushed it higher, hurting shares of the country’s big exporters. South Korea’s Kospi edged 0.1 percent lower to 1,912.53 and Hong Kong’s Hang Seng fell 1.4 percent to 19,146.54. The Shanghai Composite Index in mainland China rose 0.9 percent to 2,928.26. Australia’s S&P/ASX 200 slid 2.1 percent to 4,875.00. Benchmarks in Taiwan, Singapore, Indonesia, and the Philippines also lost ground.
Saudi Arabia’s Minister of Petroleum and Mineral Resources, Ali Al-Naimi, told a meeting of energy leaders in Houston on Monday that output cuts aimed at boosting slumping crude prices won’t work. He said that the market should instead let some operators go out of business. Crude oil tumbled more than 4 percent. The long term drop in oil prices, which are hovering at around $30 a barrel after tumbling from more than $100 in mid-2014, has sliced into profits at energy companies. It’s also now starting to hurt income at big U.S. banks as higher-cost producers struggle to repay loans taken out during the boom.
“The disappearance of risk appetite after last week’s positive performance can be traced to bad news around oil once again,” said Bernard Aw, Market Strategist at the Singapore branch of IG Markets, Ltd.
Worries about the world economy are also weighing on investors’ minds. Singapore and Hong Kong both reported Wednesday that growth slowed last year and their governments forecast further weakness for 2016 on softer global demand for their exports and services. Meanwhile, China’s currency slipped as the central bank guided its exchange rate lower for the second day in a row.
Benchmark U.S. crude futures skidded 69 cents, or 2.2 percent, to $31.18 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.52, or 4.6 percent, to settle at $31.87 a barrel on Monday. Brent crude, which is used to price oils internationally, fell 43 cents, or 1.3 percent, to $32.85 a barrel in London.
The Dow Jones industrial average fell 1.1 percent to 16,431.78 and the Standard & Poor’s 500 index lost 1.3 percent to 1,921.27. The Nasdaq composite fell 1.5 percent to 4,503.58.
The dollar fell to 111.92 yen from 111.97 yen in the previous day’s trading. The euro weakened to $1.1011 from $1.1018.