Energy stocks across the Asia Pacific region tumbled on Thursday morning as markets reacted to a 5 per cent dip in oil prices.
Oil prices were fighting to recover in Asia trading after a sharp and sudden fall late on Wednesday, prompted by news that US crude inventories had surged last week to another record high.
The size of the sell-off came as a shock to traders after more than two months of prices holding in one of the tightest ranges for a decade. It also followed Tuesday comments from Saudi Arabia’s oil minister that Opec’s supply cut deal was spurring a resurgence in US output.
Brent crude, the international benchmark, was up 0.8 per cent at $53.53 a barrel, having dropped as much as 5.3 per cent late in the previous day. West Texas Intermediate, the US marker had risen 0.7 per cent in Asia morning trade to $50.61 a barrel after tumbling as much as 5.8 per cent on Wednesday.
Energy stocks in Asia were faring badly after Wall Street saw the S&P 500 energy index drop 2.5 per cent on Wednesday in response to falling oil prices.
Sydney’s S&P/ASX 200 index was off 0.4 per cent as a fillip for consumer discretionary stocks was more than offset by a 2.4 per cent drop in the energy segment. Shares in BHP Billiton were down 4.5 per cent, while rival Rio Tinto had fallen 2.6 per cent.
In Hong Kong the Hang Seng index fell 1.2 per cent as the energy segment dropped 2.6 per cent. Leading the fall were Sinopec, down 3.3 per cent, PetroChina, down 2.2 per cent, and Cnooc, down 2 per cent.
Tokyo’s Topix was up 0.1 per cent, with rises in information technology and consumer discretionary segments mostly undone by a 1 per cent fall in energy stocks. Nippon Gas Co was down 2 per cent in morning trade while Inpex Corp was off 1.9 per cent.
Currency markets were less ruffled by the dip in crude prices, although the Australian dollar was off 0.2 per cent against its US counterpart at $0.7516.
The worst-off currency in the region was that of South Korea, which is facing rising tensions with both North Korea and China this week as it deploys a US-made missile defence system. The won was 0.8 per cent weaker against the greenback at Won1,154.9 per dollar.
Sovereign bonds in the region were not faring particularly well amid the tumult in energy equities. The yield, which moves inversely to price, on 10-year Australian government bonds was up 6 basis points at 2.92 per cent. That on 10-year New Zealand notes was up 4 bp at 3.35 per cent