Energy Firms Lead Asia Markets Down After Oil Plunge, Dollar Up

HONG KONG, March 9, (APP - UrduPoint / Pakistan Point News - 09th Mar, 2017 ) - Energy firms led a broad sell-off in Asian markets Thursday following a five percent plunge in oil prices, but the Dollar held on to gains after a surprisingly strong US jobs report.

Wall Street suffered another loss after a closely watched report showed a shock surge in US oil inventories that rekindled worries about a global supply glut that has hammered the crude market since mid-2014.

The Energy Department revealed a whopping eight million barrel increase in supplies over the past week -- four times more than expected -- owing to higher domestic production and increased stockpiling.

The news battered the oil market, with both main contracts slumping more than five percent to lows not seen since the end of last year. Jeffrey Halley, senior market analyst at OANDA, said the report was the "straw that broke the camel's back", with concerns already abound that Russia was not pulling its weight on much-vaunted production cuts agreed between OPEC and non-OPEC countries in November.

And Greg McKenna, chief market strategist at AxiTrader, said there is growing unease that too much of the burden on reducing output is being shouldered by OPEC nations, particularly kingpin Saudi Arabia.

"If they lose patience, oil -- and the bulls -- could crack wide open," he warned. While oil edged back up Thursday, Asian energy firms took the heat in early exchanges.

Japan's Inpex shed 1.5 percent, Hong Kong-listed PetroChina and CNOOC were each around two percent down and Woodside Petroleum dived 1.8 percent in Sydney.

That in turn hit wider markets, with Hong Kong down more than one percent and Shanghai 0.8 percent off, with traders brushing off another jump in China's factory gate prices that indicate a return to inflation in the country.

Sydney fell 0.4 percent and Seoul was 0.1 percent off and Singapore slipped 0.7 percent. Taipei dived more than one percent. The oil figures overshadowed a surprise jump in private jobs creation in the US, which beefed up expectations for Friday's key government jobs report and reinforced expectations the Federal Reserve will hike interest rates next week.

That in turn fired a rally in the dollar, which peaked close to 115 Yen Wednesday before paring the gains, with traders still uncertain as President Donald Trump has provided little detail on his plans to ramp up infrastructure spending and cut taxes.

Also acting as a weight on further dollar gains are concerns about upcoming elections in France and the Netherlands as well as geopolitical crises including North Korea's recent missile test. The euro dipped ahead of a closely watched policy meeting by the European Central Bank later in the day.