Asian Shares Fall Back on Weak Oil Prices, Japan Trade Data

A man wearing a face mask walks past a bank electronic board showing the Hong Kong share index at the Hong Kong stock exchange, Monday. (AP Photo/Vincent Yu)

Shares trended lower in Asia on Monday as oil prices fell back and Japan’s trade data for March was weaker than expected.

Benchmarks rose in Shanghai but fell in Tokyo, Hong Kong and Sydney.

A fresh crop of grim economic data is expected this week after a worldwide rally on Friday that pushed the S&P 500 up 2.7%.

Japan reported Monday that its exports fell nearly 12% in March from a year earlier as shipments slipped to its two biggest markets, the U.S. and China.

A decline in China’s benchmark lending rate, which mostly affects big, state-owned companies, helped support Shanghai’s Composite index. The People’s Bank of China paved the way for the monetary easing last week by reducing by 0.2% a rate called the medium-term lending facility, which forms the basis for the loan prime rate. The cuts reduce short-term borrowing costs for banks.

China’s central bank has used various targeted moves to ease the crunch from the pandemic, which resulted in a 6.8% contraction in the economy in the last quarter. “As employment conditions remain weak and external demand is being held back by lockdowns elsewhere in the world, we think the People’s Bank will take further steps to prop up activity,” economists at Capital Economics said in a commentary.

The Hang Seng index in Hong Kong lost 0.1% to 24,354.79, while the Shanghai Composite index added 0.4% to 2,850.78. The Sensex, in India, was flat at 31,601.78.

Japan’s Nikkei 225 index gave up 1.2% to 19,669.12, while the S&P/ASX 200 declined 2.5% to 5,353.00. Shares also fell in Taiwan, Singapore and Jakarta but rose in Bangkok.

Australian resource companies were pulled lower by the weakness in oil prices. Benchmark U.S. crude for June delivery lost $1.20 to $23.83 per barrel in electronic trading on the New York Mercantile Exchange. It lost 50 cents to $25.03 per barrel on Friday. Brent crude, the international standard for pricing, gave up 52 cents to $27.56 per barrel.

But the future for May delivery sank to its lowest level in two decades, dipping briefly to $14.45 per barrel.

“Basically, bears are out for blood,” Naeem Aslam of Avatrade said in a report. “The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”

Friday’s rally on Wall Street was driven by wisps of optimism over reports on early progress in a possible treatment for the coronavirus and moves by President Donald Trump to nudge states toward reopening businesses and other activities shut down to help stem the spread of the pandemic, which has killed more than 165,000 people and infected at least 2.4 million worldwide, 760,000 of them in the U.S.

The S&P 500 added 75 points to 2,874.56, while the Dow Jones industrials average advanced 3% to 24,242.49. The Nasdaq composite index gained 1.4% to 8,650.14.

By early Monday, the futures for the S&P 500 and the Dow industrials had fallen 0.5%.

Treasury yields remained extremely low. The yield on the 10-year Treasury edged lower, to 0.63% from 0.64%. It started the year near 1.90%. Bond yields drop when their prices rise, and investors tend to buy Treasurys when they’re worried about the economy.

The market’s gains were widespread Friday, across all 11 sectors that comprise the S&P 500, which has climbed more than 27% since hitting a low on March 23.

The most recent gains have been powered by hopes that the pandemic may be leveling off in some of the world’s hardest-hit areas. The rally started after the U.S. government and Federal Reserve promised massive aid for the economy.

But the S&P 500 is still down roughly 16% from the record set in February as numbers roll in and show the cataclysmic damage being done to the economy. Roughly 22 million U.S. workers have lost their jobs in the last month as businesses shut down. Banks are bracing for consumers and businesses to default on billions of dollars in loans, and no one can say for sure when the economy will get back to anything approximating “normal.”

The dollar fetched 107.86 Japanese yen, up from 107.54 yen on Friday. The euro weakened to $1.0854 from $1.0875.

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