Slump in Commodities Hammers Asian Markets
Asian markets extended Monday's losses amid sharp falls in commodities and deepening fears of a weakening global economy.
Oil prices hovered around $120 a barrel in the Asian session, after falling more than $1 overnight to head towards Monday's three-month low below $120, while gold prices skidded below the $900 an ounce mark.
The pullback in oil and metals prices pressured resources firms in Australia. The S&P ASX 200 came off a low of 2.5 percent in the day to close 1.4 percent down. BHP Billiton shed 6.6 percent and Woodside Petroleum lost 5.2 percent as oil prices slipped to around $120 a barrel on worries that a global economic slowdown would dent demand. Bank stocks capped the market's losses, after the central bank kept interest rates on hold at 7.25 percent but is seen as likely to ease rates in the future.
Japanese energy stocks were not spared from the commodities selloff as Inpex Holdings dropped more than 4 percent. This added pressure on the Nikkei 225, which closed 0.14 percent after a choppy session. Buying in exporters like Toyota Motor and Sony lent support to the market due to the weaker yen.
Credit Saison soared more than 12 percent after financial sources said the consumer credit company was in merger talk with Orix. Orix shares rose under 5 percent.
The Hang Seng Index fell 2.5 percent, crossing the 22,000 support level, dragged lower by dips in energy and resources stocks. Gold miner Zijin Mining plunged nearly 12 percent at one point as the precious metal fell below $900 an ounce on weaker oil prices, while coal miner China Shenhua Energy lost 8.9 percent. Shares of Bank of East Asia tumbled after the Hong Kong-based lender posted a dismal 52-percent drop in first-half net profit to HK$894 million ($114.6 million). Financial giant HSBC slid after reporting a 28 percent drop in first-half profit as it took a $14 billion hit from bad debts on U.S. home loans and asset write-downs.
The South Korean Kospi lost 0.5 percent. Investors remained wary about uncertainties in the global economy. Shares in LG Display tumbled as much as 4 percent as falls in prices of liquid crystal display panels raised concerns about its future earnings. However, Korean Air Lines jumped 2.8 percent as lower oil prices brought relief to carriers in the region.
Taiwan stocks closed at a three-week low, losing of 2.3 percent amid weak sentiment, as persistent concerns about slowing demand hammered tech stocks like TSMC, in line with Wall Street's weaker finish overnight.
Singapore's Straits Times Index lost 0.5 percent as economic growth concerns continued to weigh on market sentiment. Shipping firm Cosco Corporation plunged as much as 5 percent to a four-month low after JPMorgan cut its investment rating to "neutral" from "overweight", citing concerns about higher steel prices. Palm oil counters were hit after Malaysian crude palm oil futures plunged to a fresh nine-month low as a weak crude oil market and high stock levels dampened sentiment. Wilmar International dropped as much as 4.7 percent.
In China, the Shanghai Composite closed 1.9 percent lower in thin trading, led down by resources stocks in response to the slump in oil and metals prices. Property shares sank after industry leader Vanke reported a 24-percent rise in first-half net profit but investors were rattled by weakness in China's residential property market.