Asia Markets

Asia stocks decline following overnight drop in US crude prices

Key Points
  • Stocks in Asia dropped on Tuesday.
  • CNN reported Tuesday, citing an unnamed U.S. official with direct knowledge, that Washington is "monitoring intelligence" that Kim is in "grave danger after a surgery." Confusion remained, however, over the state of Kim's health. 
  • The May contract for West Texas Intermediate, which expires Tuesday, dropped more than 100% overnight to settle at negative $37.63 per barrel. In the afternoon of Asian trading hours on Tuesday, the price of the May WTI contract shed earlier gains to fall back into negative territory.

Stocks in Asia fell on Tuesday as the May contract for U.S. crude reentered negative territory.

Mainland Chinese stocks fell on the day, with the Shanghai composite down 0.9% to about 2,827.01 while the Shenzhen composite shed 0.817% to approximately 1,753.42. Hong Kong's Hang Seng index fell 2.09%, as of its final hour of trading.

In Japan, the Nikkei 225 fell 1.97% to close at 19,280.78 as shares of index heavyweights Fast Retailing and Softbank Group dropped 3.74% and 4.11%, respectively. The Topix index also shed 1.15% to end its trading day at 1,415.89.

Meanwhile, stocks in Australia slipped, with the S&P/ASX 200 closing 2.46% lower at 5,221.30.

That came as the Reserve Bank of Australia's minutes for its April meeting, released earlier on Tuesday, showed the "Board remained committed to supporting jobs, incomes and businesses" as the country responds to the coronavirus outbreak.

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In the minutes, members also noted that "the Australian banks were in a strong position to withstand the large economic shock" from the Covid-19 outbreak and financial market volatility. 

South Korea's Kospi dropped 1% to close at 1,879.38 while the Kosdaq index dropped 1.42% to finish its trading day at 628.77. The South Korean won also weakened against the greenback as it traded at 1,229.65 per dollar.

The moves came after CNN reported Tuesday, citing an unnamed U.S. official with direct knowledge, that Washington is "monitoring intelligence" that Kim is in "grave danger after a surgery."

Confusion remained, however, over the state of Kim's health. 

"We confirm that Chairman Kim Jong Un is currently touring provincial areas with his close aides and we do not detect evidences to support speculation about his ill health," South Korea's presidential office told NBC News. "Even North Korea's Worker's Party, military or cabinet are showing any special movements such as emergency decree. We believe that Chairman Kim is active as normal as he has been."

Reuters also reported, citing two government sources, that Kim was not gravely ill.

Overall, the MSCI Asia ex-Japan index fell 2.2%.

On the corporate news front, Virgin Australia announced Tuesday that the firm has entered voluntary administration to "recapitalise the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis." That comes as the airline sector has taken a huge beating from the coronavirus pandemic, with travel heavily restricted as authorities globally race to stem the virus' spread.

Overnight stateside, the Dow Jones Industrial Average closed 592.05 points lower at 23,650.44 while the S&P 500 slipped 1.8% to end its trading day at 2,823.16. The Nasdaq Composite pulled back 1% to close at 8,560.73.

The moves came as the May contract for West Texas Intermediate, which expires Tuesday, dropped more than 100% to settle at below zero — at negative $37.63 per barrel, a bizarre move tied to weak demand outlook and storage capacity issues.

In the afternoon of Asian trading hours on Tuesday, the price of the May WTI contract shed earlier gains as it reentered negative territory, trading at negative $4.29 per barrel. The June U.S. crude contract gained 0.29% to $20.49 per barrel. International benchmark Brent crude futures dropped 7.27% to $23.71 per barrel.

“I think oil will continue to be very challenged by that combination of ... demand slowdown as the bulk of the world's economy is still in the acute stage of the virus and the related economic shutdown and the simple inability for a global energy sector to respond in real time to such an unbelievable collapse in demand in such short order," Ben Powell, chief investment strategist for Asia Pacific at BlackRock Investment Institute, told CNBC's "Street Signs" on Tuesday.

The U.S. dollar index, which tracks the greenback against as basket of its peers, was last at 100.108 after an earlier low of 99.928.

The Japanese yen traded at 107.36 per dollar after seeing an earlier low of 107.79. The Australian dollar changed hands at $0.6312, off levels above $0.635 seen yesterday.