Asia report: Markets mixed as investors try and make sense of oil market

Markets in Asia finished mixed on Wednesday, as investors continued to try and make sense of the ongoing oil price rout amid the Covid-19 coronavirus pandemic.

In Japan, the Nikkei 225 was down 0.74% at 19,137.95, as the yen strengthened 0.1% against the dollar to last trade at JPY 107.69.

Fashion firm Fast Retailing managed gains of 0.88%, while among the benchmark’s other major components, automation specialist Fanuc was down 0.41% and technology conglomerate SoftBank Group slid 4.7%.

The broader Topix index ended its session weaker as well, losing 0.63% to close at 1,406.90.

On the mainland, the Shanghai Composite was up 0.6% at 2,843.98, and the smaller, technology-heavy Shenzhen Composite rose 1.05% to 1,771.80.

South Korea’s Kospi added 0.89% to 1,896.15, while the Hang Seng Index in Hong Kong was 0.42% firmer at 23,893.36.

Both of the blue-chip technology stocks finished higher in Seoul, with Samsung Electronics up 1.22% and chipmaker SK Hynix adding 3.2%.

Oil prices were the main headline of the day once again, as Brent crude futures plunged to well below $20 per barrel, and West Texas Intermediate continued its decline.

The crude price rout began on Monday, when the May contract for West Texas Intermediate fell into negative territory - meaning vendors would pay others to take their oil - for the first time ever.

It managed to pare back into the positive before the contract expired on Tuesday.

“Oil futures prices should turn around once demand picks up for the physical product but that looks a couple of months away given the gradual lockdown easing policies afflicting most economies,” said London Capital Group analyst Jasper Lawler.

Brent crude was last down 2.01% at $18.95 per barrel as the Asian region went to bed, while West Texas Intermediate was 1.49% lower at $11.40.

The outlook for the coronavirus crisis was also looking slightly rosier, as it emerged overnight that a group at Oxford is preparing to begin the first human trials of a Covid-19 vaccine candidate on Thursday.

“Oxford University thinks the vaccine they are developing has an 80% chance of success," Jasper Lawler said, adding that corporate partnerships would likely be needed for any vaccine.

In Australia, the S&P/ASX 200 was broadly flat, losing 0.002% to close at 5,221.20, while across the Tasman Sea, New Zealand’s S&P/NZX 50 closed 1.12% lower at 10,417.67.

Refining New Zealand, which counts BP and ExxonMobil among its major shareholders, was down 9.8% in Wellington as oil prices slid.

Last week, the company said it was considering shutting down its refining operations altogether and operating a pure import model, which would leave New Zealand without any crude refining capacity.

The down under dollars were stronger on the greenback, with the Aussie last ahead 0.96% at AUD 1.5767, and the Kiwi advancing 0.52% to NZD 1.6683.