HONG KONG (AFP) – Asian markets mostly slipped Tuesday following a sell-off in Europe and the United States, as oil prices plunged to more than five-year lows and data indicated Chinese manufacturing activity shrank in December.
The dollar and euro edged lower against the yen after losing pace Monday due to the uncertainty created by weak crude prices, which have increased pressure on Russia’s economy and spooked investors.
Tokyo tumbled 2.01 per cent, or 344.08 points, to finish at 16,755.32. Sydney fell 0.65 per cent, or 33.78 points, to 5,152.3 and Seoul lost 0.85 per cent, or 16.23 points, to end at 1,904.13.
Hong Kong stocks ended 1.55 per cent lower, giving up 357.35 points to 22,670.5, but Shanghai jumped 2.31 per cent, or 68.10 points, to 3,021.52.
In China, banking giant HSBC said its preliminary index of manufacturing activity came in at 49.5 this month, compared with 50 in November. Anything below 50 points to contraction and anything above shows growth.
The figures are the latest in a long line that show the world’s number two economy is slowing. However, Shanghai shares advanced – extending a recent bull run – on hopes the government will introduce new measures to spur growth.
Nomura economists said: “The greater-than-expected decline… raises the possibility that December data will disappoint. We expect more policy easing to help stabilise growth and to achieve the annual growth target of around 7.5 per cent for 2014.”
Oil-linked firms are being hammered after crude prices plunged by about half from their June highs, weighed down by an oversupply on world markets, falling demand and OPEC’s decision to maintain high output levels.
Despite the benefits cheap oil brings to some, global stock markets have been dragged down by energy giants and analysts warn there could be further falls on the way.
On Tuesday US benchmark West Texas Intermediate for January delivery fell 33 cents to $55.58 while Brent crude for January shed $1.43 to $59.63 in early London trade, tumbling below the $60 mark for the first time since mid-2009.
US shares tumbled Monday, with the Dow off 0.58 per cent, the S&P 500 falling 0.63 per cent and the Nasdaq slumping 1.04 per cent.
Earlier Monday London’s FTSE 100 ended down 1.87 per cent, while equity markets in France and Germany fell more than 2.5 per cent.
“Oil prices continue to slide, and that is now the chief worry to Russia, which is essentially an oil-exporting economy,” Yoshihiro Okumura, general manager at Chibagin Asset Management, told Dow Jones Newswires.
“The creeping fear is that Russia may default, reminding investors of the prior Greek fiscal panic, and require a bailout. Beyond that, a ‘domino effect’ of worsening fiscal conditions at other oil-exporting nations may take hold.
“Oil prices look far from settled at the mid-$50 level, so more pain may yet be in store.”
Moscow was forced to ramp up interest rates early Tuesday, to 17 per cent from 10.5 per cent, after the ruble plunged to a record low against the dollar.
The slide came as the Russian central bank said weak oil prices could lead to a contraction of nearly five per cent next year and as tensions with the United States over the Ukraine crisis increased.
In Asian trade the ruble slipped again, sitting at 64.23 to the dollar before rebounding sharply to 59 in initial exchanges in Moscow Tuesday. However, the uncertainty pushed the yen up against the dollar as traders looked for safer investments. Gold was at $1,196.67 an ounce compared with $1,210.54 late Monday.