Asia Falls on Commodity Slump By COLIN NG
SINGAPORE -- Asian stock markets were weaker Friday, with commodity-related stocks battered after oil and metals prices dropped sharply Thursday.
Risk aversion was the order of the day, after weaker-than-expected U.S. jobless claims data Thursday dragged down U.S. stocks and sparked a heavy selloff in oil and metals.
Japan's Nikkei Stock Average was down 1.7%, Australia's S&P/ASX 200 was down 0.3%, South Korea's Kospi Composite dropped 1.3% and New Zealand's NZX-50 was off 0.1%.
Dow Jones Industrial Average futures were up 11 points in screen trade.
Oil-bears remained in play in Asia, with June Nymex crude oil futures falling 29 cents to $99.51 per barrel on Globex, extending a massive 8.6%, or $9.44, fall Thursday to its lowest settlement since March 16.
Thursday's sharp fall by crude futures virtually removes the chance of fresh price highs for at least two months, barring a major exogenous event, said Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates.
The likely scenario now was "another $5-$7 on the downside per both WTI and Brent (crude) in relatively short order as the large speculative community seeks to acquire a better balance within their energy positions to a rapidly changing risk environment," he added.
Commodity and oil producers across the region were lower; in Australia, BHP Billiton was down 2.2% and Rio Tinto fell 2.0% while Woodside Petroleum lost 1.0% and Origin Energy lost 1.3%.
In Japan, the Topix mining subindex was the worst performer on board with a 5.5% drop; Inpex lost 5.5% and JX Holdings fell 3.2%. In Korea, SK Innovation was down 7.1% and S-Oil Corp. lost 6.8%. Shipbuilders were lower as the fall in crude prices dimmed hopes for an expansion of offshore oil-development projects. Hyundai Heavy Industries fell 4.0% and Samsung Heavy Industries lost 3.6%.
"We don't know if this is the beginning of a downward trend (in oil prices), but there are some questions over the optimism that has prevailed" despite the fact that the U.S. Federal Reserve's quantitative easing program is expected to be concluded in June, said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.
In Sydney, "it's a bit early for bottom fishing in commodity stocks, because these things tend to overshoot, but I think the bulks will hold up because the fundamentals haven't changed," said RBS Morgans investment adviser, Chris MacDonald. "The switch from resources to banks is in full swing."
Among Australian banks, National Australia Bank was up 1.8% and Westpac was up 0.5%.
There were bright spots in the market with airline stocks rising due to cheaper oil prices. Australia's Qantas gained 1.9% and Virgin Blue rose 5.3% while Korea Air Lines gained 2.3% and Asiana Airlines added 3.4%
Spot gold was at $1,487.40 per troy ounce, up $14.30 from its New York settlement Thursday, bouncing after Thursday's $42.05 loss. Recent data from the International Monetary Fund show central banks in Mexico, Russia and Thailand together bought about 121.4 metric tons of gold during February and March. "However, we don't feel this is significant enough to turn sentiment," Standard Bank said.
London Metals Exchange base metals consolidated, taking a breather after Thursday's drop saw the LME three-month copper futures contract fall $304 to $8,819 per ton. It was last up $21 at $8,840 from London's late kerb close.
In foreign exchange markets, the euro was a little higher against the U.S. dollar as it consolidated after heavy losses Thursday. Trade was relatively thin, with many Tokyo traders still away for Japan's Golden Week holidays and on caution ahead of key U.S. nonfarm payroll data later in the global day.
The euro was at $1.4574, from $1.4541 in late New York trade Thursday, and at ¥117.33 against the Japanese yen, from ¥116.43, after it hit a five-week low of ¥116.15 Thursday.
Appetite for the euro continued to be dampened by Thursday's less-hawkish-than-expected comments from European Central Bank chief Jean-Claude Trichet, after the ECB left interest rates on hold.
The dollar was at ¥80.50, from ¥80.05 in late New York, and well off its U.S. session low of ¥79.57.
"I think you can start dipping your toes back in the water," said Robert Rennie, chief currency strategist at Westpac. He added "we've long believed the strength in the yen, even pre-quake, was unwarranted."
Lead Japanese government bond futures were up 0.49 at 140.59 points, lifted by the Nikkei's losses and gains for U.S. Treasurys Thursday. The yield on the 10-year cash JGB was down three basis points at 1.170%.
Write to Colin Ng at colin.ng@dowjones.com
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