Asia Markets

Asian indexes close mixed as oil struggles

Key Points
  • Oil prices ceded earlier gains to edge lower in Asia trading hours
  • Oil had tumbled more than 2 percent overnight, with crude falling to a 10-month low overnight
  • A government-led consortium that was selected as the preferred bidder for Toshiba's memory unit outlined ownership stakes for the unit

Asian markets closed sideways after cautious trade on Thursday as oil prices declined further.

The Nikkei 225 reversed earlier gains to close lower by 0.14 percent or 28.28 points at 20,110.51 and the Kospi rose 0.54 percent or 12.84 points to close at 2,370.37.

Australia's S&P/ASX 200 climbed 0.71 percent or 40.279 points to end at 5,706, with energy and materials stocks showing signs of recovery after selling off in the previous session.

Markets in greater China traded lower. The shed 0.13 percent at 3:07 p.m. HK/SIN. On the mainland, the declined 0.29 percent or 9.0869 points to close at 3,147.1249 and the Shenzhen Composite fell 1.29 percent or 24.3536 points to end the session at 1,862.8391.

Oil prices gave up earlier gains to trend lower. U.S. West Texas Intermediate edged lower by 0.38 percent to trade at $42.36 a barrel and Brent crude was down by 0.42 percent at $44.63.

Prices had fallen more than 2 percent overnight despite the U.S. Energy Information Administration (EIA) announcing that inventories had fallen more than expected.

"Panic has given way to paranoia," Vanda Insights Founder Vandana Hari told CNBC, citing technical selling and herd mentality as possible reasons why markets failed to prop up prices despite the drawdown in U.S. inventories overnight.

With Brent crude prices below the $45 handle, OPEC may be forced to deepen production cuts, Hari added. Saudi Arabia, the de-facto leader of OPEC, is preparing for the IPO of Saudi Aramco next year and "cannot afford prices below $50," she said.

Will OPEC deepen output cuts?

Most Australian energy stocks made gains even though oil stocks in South Korea and Japan remained in negative territory. Oil and gas producer Santos was up 1.03 percent and Oil Search was up 2.17 percent at the close.

"Yesterday's anticipatory selling (in Australia) looks overdone in light of the much milder responses in Europe and the U.S. overnight. Local traders and investors are re-calibrating their views," CMC Markets Chief Market Strategist Michael McCarthy told CNBC in an email.

Meanwhile, the Nikkei broke down the ownership stakes proposed by a government-led consortium in Toshiba's memory chip business. The consortium was selected as a preferred bidder for the memory unit yesterday.

The Innovation Network Corporation of Japan would own 50.1 percent of the stock and the Development Bank of Japan would own 16.5 percent. Bain Capital and SK Hynix will have a share in the leftover 33.4 percent. The proposal potentially gives the latter two companies veto power, Nikkei said.

Shares of Toshiba closed 0.28 percent lower at 322.1 yen a stock and SK Hynix finished the session higher by 0.31 percent at 65,000 won.

Market hopes and fears in 2017

Autoparts maker Takata may file for bankruptcy next Monday, media reports stated on Thursday. Shares of the company closed 54.92 percent down at 110 yen.

Wanda Film Holding shares were suspended from trade on the Shenzhen exchange after tumbling 10 percent. Bonds issued by the Dalian Wanda Group declined by 1.8 percent today, Reuters said.

The company said in a statement that there had been internet speculation about its bonds, but Dalian Wanda added that those were "just rumors" and that "all (of its) operations are fine."

In currency news, the dollar traded at 97.494 against a basket of rivals, edging lower from a high of 97.802 seen in the last session. The greenback was softer against the yen, which traded at 111.14 to the dollar at 2:35 p.m. HK/SIN.

The New Zealand dollar reached $0.7275, near a four-month high, after the Reserve Bank of New Zealand kept interest rates on hold compared to levels around the $0.721 handle seen earlier. The Kiwi dollar last traded at $0.7251.

Meanwhile, the traded at $1.2668 at 2:35 p.m. HK/SIN, compared to levels around the $1.262 handle seen earlier this week.

The sterling's gains followed hawkish remarks from Bank of England Chief Economist Andy Haldane that he would back raising interest rates later this year. BOE Governor Mark Carney had earlier said that it was not the right time to raise rates yet.

On Wall Street, equities ended mostly lower as energy stocks remained under pressure due to low oil prices.

On the economic calendar for Thursday, the Philippine central bank makes its policy decision at 4:00 p.m. HK/SIN. Hong Kong releases first quarter current account data at 4:30 p.m. Taiwan's central bank will announce its policy decision after the market close at 5:25 p.m.