HONG KONG (AFP) – Oil prices resumed their downward spiral in Asia Thursday after rallying in the previous session on bargain-buying, while the dollar recovered after plunging in New York in reaction to disappointing US retail sales data.
Most regional markets enjoyed a pick-up following recent losses, with Mumbai boosted by a surprise interest rate cut by the Reserve Bank of India and Tokyo boosted by a weaker yen.
Shanghai and Hong Kong was also supported by speculation Chinese leaders are taking measures to increase liquidity in financial markets in a bid to boost lending.
Crude enjoyed a rare five per cent rally on Wednesday after plunging close to six-year lows, with analysts saying a pick-up had been expected after the commodity had crashed more than 50 per cent since June.
However, the two main contracts retreated again Thursday as dealers digested news that US stockpiles had risen, adding to long-running concerns about a supply glut and weak demand.
US benchmark West Texas Intermediate for February delivery lost 70 cents to $47.78 and Brent fell 116 cents to $47.53.
In share trading Tokyo rose 1.84 per cent, or 312.74 points, to end at 17,108.70 as the dollar recovered against the yen after taking a hit in New York, while Shanghai surged 3.54 per cent, or 114.02 points, to end at 3,336.46.
Seoul was marginally higher, adding 0.48 points to close at 1,914.14 but Sydney lost 0.41 per cent, or 22.2 points, to finish at 5,331.4.
Hong Kong jumped 0.53 per cent, or 238.31 points, to end at 24,350.91, while in late trade Mumbai was up 2.45 per cent.
Regional traders were given a negative lead from Wall Street, where the losses in crude mixed with figures showing a surprise 0.9 per cent fall in US retail sales in December.
The Dow fell 1.06 per cent, the S&P 500 shed 0.58 per cent and the Nasdaq lost 0.48 per cent – marking a fourth-straight day of losses for US markets.
Adding to the downbeat sentiment was news that the World Bank had cut its growth forecast for the global economy, saying a US recovery was not enough to drag up other economies.
There was some good news, however, with the Federal Reserve saying in its Beige Book report that the US economy kept up “modest” or “moderate” growth in recent weeks.
On currency markets the dollar climbed after being hammered Wednesday in response to the poor retail sales figures, which could force the Fed to rethink its plan to hike interest rates by the middle of the year.
The greenback bought 117.77 yen in Tokyo Thursday, up from 117.39 late in New York, where at one point it hit a low of 116.08.
The euro bought $1.1773 and 138.64 yen Thursday against $1.1782 and 138.30 yen in US trade.
Shanghai stocks resumed their rally Thursday on talk that Beijing will pump more cash into the market.
“There are expectations for ample liquidity after news that the central bank is widening the definition of deposits,” Zhang Yanbing, a strategist at Zheshang Securities in Shanghai, told Bloomberg News. Zhang added there was also talk of a cut in the amount of cash banks must keep in reserve.
Gold was $1,227.32 an ounce, compared with $1,238.84 on Tuesday.