Asia's markets trade mixed as energy shares recover

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Asia's markets traded mixed on Monday, with many markets retracing initial weakness that had followed Wall Street's sharp losses on Friday.

The market swings were likely related to thin year-end trade accentuating fluctuations. Among the odd moves, oil prices dropped, but energy shares around the region advanced.

U.S. crude oil futures for January delivery, which expire Monday, were down 0.7 percent at $34.49 a barrel in Asia trade, extending declines after losing 2.5 percent in total last week. Brent futures for February delivery were 1.2 percent lower at $36.43 a barrel in Asia trade, after falling as low as $36.17, an 11-year low.

Energy shares might be finding some support on expectations oil prices might be nearing a bottom.

"Although this week we may see some downwards push to oil prices as a result of the U.S. Dollar Index (rising), we highly doubt that prices could move much lower," Daniel Ang, an investment analyst at Phillip Futures, said in a note Monday. He expects Brent might find a floor around $36.20.

In Japan, Inpex tacked on 0.3 percent and in Australia, several energy plays posted strong gains. LNG rose 8.8 percent and Santos tacked on 4.1 percent. Hong Kong-listed shares of Cnooc added 1.7 percent, while Sinopec rose 1.1 percent.

In Japan, the Nikkei 225 index closed down 0.4 percent in afternoon trade, retracing an early decline of as much as 1.8 percent, extending Friday's 1.9 percent drop. On Friday, the market took a wild ride after the Bank of Japan disappointed traders hoping for additional stimulus.

The BOJ kept monetary policy unchanged as expected, but the central bank announced a new program to purchase ETFs at annual pace of 300 billion yen ($2.45 billion). This is in addition to the bank's existing ETF purchase program which increases holdings at an annual pace of about 3 trillion yen.

Stephen Innes, senior trader at OANDA Asia Pacific, said the BOJ's move Friday "utterly confused" the market, noting that the ETF program targets not-yet-created funds that target firms "proactively" investing in physical and human capital.

"These types of BOJ moves raise credibility issues regarding the central bank among traders, which accomplishes little more than creating unnecessary volatility in the markets at a time (of year) when liquidity is traditionally at a premium," Innes said in a note Monday.

The BOJ's moves pushed up the yen against the dollar, likely weighing on shares of exporters. The greenback was fetching 121.33 yen in afternoon trade Monday, compared with around 122.40 yen before the decision Friday.

Among exporters, Toyota dropped 1.0 percent and Sony fell 1.9 percent.

Toshiba plunged 9.8 percent after Dow Jones reported over the weekend that people familiar with the matter said the company is likely to post a full year net loss of around 500 billion yen, or $4.1 billion. After the market close, Toshiba said it expects to post a fiscal year net loss of 550 billion yen.

Sharp was flat after the Nikkei business daily reported over the weekend that U.S. buyout firm KKR & Co. was among the private equity firms interested in investing in the company.

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Australia shares erased early losses, with the S&P/ASX 200 index ending a tad up, adding 0.1 percent to 5109.

Despite the commodity-dependent market facing headwinds from drops in oil and iron ore prices, some see shares down under finding support.

"We see several oversold positions being closed and managers are looking to close the books on a positive note. We expect the ASX to remain above 5000 points for a 'positive' end to a negative year. We remain confident that buying will continue for the last seven days of trade (for 2015)," Evan Lucas, market strategist at spreadbettor IG, said in a note Monday.

Shares of Crown Resorts rose 4.1 percent after news that Australian tycoon James Packer, who owns more than half of the casino company, quit the board.

In Hong Kong and China, shares traded higher after initially swinging between positive and negative territory. Hong Kong's Hang Seng Index was up 0.17 percent and the Shanghai Composite added 1.78 percent at the close.

Banks were higher, with Bank of China's mainland-listed shares up 0.7 percent, while its Hong Kong-listed ones were up 0.6 percent. Hong Kong-listed property shares were mixed, with Shimao Property off 1.4 percent, Greentown up 4.1 percent and Hysan Development losing 0.9 percent.

In South Korea, the Kospi added 0.3 percent, closing higher after wavering between positive and negative territory. Heavyweight exporters were mixed, with Samsung Electronics rising 0.2 percent and Hyundai Motor off 1.3 percent.

Samsung Engineering rose 0.3 percent after saying it won a $552 million order after the share rose more than 8 percent in total last week.

The Dow Jones industrial average had its worst day since Sept. 1, closing nearly 370 points lower as selling accelerated into the close. The S&P 500 fell more than 1.5 percent, with financials plunging 2.5 percent to lead all sectors lower. The Nasdaq composite declined about 1.6 percent to close below the psychologically key 5,000 level.

By's Leslie Shaffer. Follow her on Twitter @LeslieShaffer1