Asian markets were mixed Friday as regional stocks reacted to China's hiking of fuel prices. Trading has been volatile throughout the session with markets, particularly in Shanghai, making radical swings between positive and negative territory.
Oil prices dropped almost $5 in New York trade overnight after China said it will raise fuel prices by as much as 18%, a move that could dampen the booming Asian nation's oil consumption. Crude oil is currently trading at the $132 level in the Asian session Friday.
Shares in Asia's largest oil refiners, including Sinopec and PetroChina, and China's top power producers surged as investors were cheered after worries over dwindling margins. This is China's first increase in regulated fuel prices in eight months.
Oil sensitive counters such as South Korea's Korea Air Lines and Australia's Qantas Airways were both up sharply in early trade. Not surprisingly, energy companies such as Inpex Holdings and Woodside Petroleum fell in tandem with oil prices.
Tokyo's Nikkei 225 Average slipped 1.3 percent, led down by Kyocera and other blue chip stocks as many investors come to view the recent rise in Japanese shares as over for now. Inpex Holdings closed 3.7 percent down as oil prices fell after China said it will raise domestic fuel prices.
South Korea's KOSPI closed half a percent lower, led by refiners such as GS Holdings on worries about increased competition following regulatory changes, but airlines such as Korean Air Line, up 2.6 percent, held firm on easier oil.
Australian shares fell 1.5 percent to a three-month closing low, as debt-laden infrastructure and property firms fell after Transurban Group and others cut their distribution forecasts due to rising credit costs.
Hong Kong shares closed 0.2 percent lower but the main index came off earlier highs. Hong Kong's leading airline, Cathay Pacific, soared 1.9 percent as international crude oil prices fell below $132 per barrel on concern over reduced demand from China, the world's second-biggest oil consumer.
Singapore's Straits Times Index ended 0.7 percent higher with NOL, Keppel Corp and Keppel Land all advancing.
China's Shanghai Composite Index surged 3 percent in extremely volatile trade after the government hiked domestic fuel prices. PetroChina, the biggest stock in the index, jumped almost 5 percent as its refining margins will be aided by the price hike. The fuel price rise is expected to be negative for many downstream industries, especially transport firms and metals producers.