Energy Firms Dive In Asia After Oil Slump, Broader Markets Slip
Rukhshan Mir (@rukhshanmir) Published November 14, 2018 | 11:36 AM
Asian energy firms took another battering on Wednesday after oil prices suffered their worst day in three years, while the region's equity markets fell into negative territory.
Hong Kong, (UrduPoint / Pakistan Point News - 14th Nov, 2018 ) :Asian energy firms took another battering on Wednesday after oil prices suffered their worst day in three years, while the region's equity markets fell into negative territory.
The pound enjoyed some support after Britain and the EU said they had reached a draft Brexit deal, though observers were cautious as it faces a number of hurdles before being given the green light.
Both main crude contracts plunged Tuesday -- Brent lost 6.6 percent and WTI 7.1 percent -- on oversupply fears just as demand falters in the face of the China-US trade war and easing economic growth.
With prices now down more than a fifth from their four-year highs seen in early October, oil kingpin Saudi Arabia this week said it will cut output. The announcement fuelled an initial surge in the crude market before a Donald Trump tweet calling for it to keep prices low sent the commodity plunging.
The selling continued on Tuesday and then Wednesday in Asia after OPEC trimmed its outlook for demand this year.
And energy firms were caught in the crossfire.
Hong Kong-listed CNOOC dived four percent while Sinopec and PetroChina each lost around three percent. In Tokyo, Inpex was more than two percent down and Woodside Petroleum sank 3.5 percent.
"Oil prices remain the hottest topic in capital markets if not in the world after extending their slide to 12 days and suffering one of the more precipitous falls in years," said Stephen Innes, head of Asia-Pacific trade at OANDA.
"It's all about the toxic combination of weakening global demand and oversupply that has sent prices tumbling." Broader markets were also lower. Tokyo ended the morning down 0.1 percent, with traders also taking note of data showing the Japanese economy shrunk in July-September owing to weakness in China and a series of natural disasters hitting domestic spending.
Hong Kong and Shanghai were each down 0.4 percent, Sydney lost more than one percent and Singapore was off 0.3 percent.
Seoul dropped 0.4 percent and Wellington gave back 0.3 percent, though Manila, Taipei and Jakarta edged up.
There was little movement after comments from the White House's top economics adviser Larry Kudlow that US and Chinese officials were "having communications at all levels" on trade ahead of a possible meeting between Trump and President Xi Jinping this month.
With both sides digging their heels in, expectations for a breakthrough are low, analysts said.
On Currency markets the pound managed to hold on to small gains that came on the back of news that Prime Minister Theresa May finally had a Brexit agreement to put to her cabinet.
However, she must now get it past a divided cabinet before putting it to parliament, where both pro- and anti-Brexit MPs unhappy with the few details that have so far emerged from the pact.
"Failure to pass the deal will raise the prospects of a disorderly Brexit, a general election and also a second referendum," said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank.
"By the end of the week with some certainty the pound won't be trading near current levels, it could be significantly higher or massively lower."The euro was also enjoying some lift from the Brexit news, though the gains were tempered by news that Italy's populist government had stuck to its wallet-busting budget plan, putting it on course for a standoff with Brussels.
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