Asia report: Most markets lower as oil plunges, China cuts rates

Most markets in Asia finished lower on Monday, although stocks in China did end the day in the green, as Beijing once again took the secateurs to the country’s loan prime rates.

In Japan, the Nikkei 225 was down 1.15% at 19,669.12, as the yen weakened 0.14% against the dollar to last trade at JPY 107.69.

Of the major components on the benchmark index, automation specialist Fanuc was down 0.87% and fashion firm Fast Retailing lost 2.24%, while technology conglomerate SoftBank Group rose 1.16%.

The broader Topix index ended the session 0.7% lower at 1,432.41.

On the mainland, the Shanghai Composite was 0.5% firmer at 2,852.55, and the smaller, technology-heavy Shenzhen Composite was ahead 1% at 1,767.86.

The gains in China came after the People’s Bank cut interest rates again, lowering the one-year loan prime rate to 3.85% from 4.05%, while the five-year rate was trimmed to 4.65% from 4.75%.

It marked the second cut to the rates so far in 2020.

South Korea’s Kospi was 0.84% weaker at 1,898.36, while the Hang Seng Index in Hong Kong was off 0.21% at 24,330.02.

Both of the blue-chip technology stocks were weaker in Seoul, with Samsung Electronics down 2.53% and SK Hynix off 2.5%.

Oil prices were well into the red toward the end of the Asian day, led by US crude futures for May, ahead of the expiry of that contract on Tuesday.

West Texas Intermediate was last down 34.34% at $13.60 per barrel, while Brent crude slipped 3.77% at $27.06.

David Madden, market analyst at CMC Markets, said: "The dreadful economic indicators released last week feed into the narrative that demand for oil will fall sharply."

Analysts said Monday's plunge was exacerbated by the imminent expiry of the WTI futures contract for May, leading to what the oil market calls a contango when short-term prices are lower than those in the future, encouraging traders to store oil.

Spreadex analyst Connor Campbell said that those falling oil prices, combined with uncertainties over this week’s impending data and "Donald Trump’s dangerous handling of the Covid-19 pandemic”, were major global risk factors at the start of the week.

“It is likely going to be a week of rough data, arguably starting with the ZEW economic sentiment readings and the UK’s first coronavirus-relevant jobless claims number on Tuesday, eurozone consumer confidence on Wednesday, and, most importantly, a wave of flash manufacturing and services PMIs on Thursday, alongside the usual shock of the US unemployment claims figures.”

In Australia, the S&P/ASX 200 lost 2.45% to end its session at 5,353.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.15% weaker at 10,762.67.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.08% at AUD 1.57, and the Kiwi advancing 0.43% to NZD 1.6507.