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Asian Markets In Negative Territory After Oil Price Plunge

asiancommentary jan03 20apr20 lt

Asian stock markets are in negative territory on Tuesday following the weak cues overnight on Wall Street after crude oil futures turned negative overnight for the first time in history indicating the fall in energy demand due to the coronavirus pandemic. However, crude oil futures for May delivery turned positive in Asian trading. Worries about the economic impact of the coronavirus pandemic also weighed on the markets.

The Australian market is extending losses from the previous after crude oil futures turned negative for the first time ever. Investor sentiment was further dampened as Australia's second biggest airline Virgin Australia entered voluntary administration.

The benchmark S&P/ASX 200 Index is declining 34.50 points or 0.64 percent to 5,318.50, after falling to a low of 5,308.10 earlier. The broader All Ordinaries Index is down 38.30 points or 0.71 percent to 5,376.40. Australian stocks closed notably lower on Monday.

Virgin Australia, which is struggling with a nearly A$5 billion debt load and the coronavirus pandemic, has entered voluntary administration after failing to secure a A$1.4 billion lifeline from the Australian government. Shares of the airline, which employs 10,000 people and supports another 6,000 jobs indirectly, are in a trading halt.

In the mining space, BHP and Rio Tinto are declining more than 1 percent each, while Fortescue Metals is adding 0.5 percent.

In the oil sector, Oil Search is losing 0.4 percent and Woodside Petroleum is lower by 0.3 percent after crude oil futures turned negative overnight for the first time ever.

Among the big four banks, Westpac, Commonwealth Bank and National Australia Bank are higher in a range of 0.3 percent to 0.5 percent. ANZ Banking is edging down 0.1 percent.

Among gold miners, Evolution Mining is rising almost 3 percent and Newcrest Mining is adding 0.6 percent after safe-haven gold prices rose overnight.

Incitec Pivot said it will retain its fertilizer business after suspending talks with potential buyers due to market uncertainty caused by the coronavirus. The fertilizers and explosives producer's shares are gaining more than 2 percent.

In economic news, minutes from the Reserve Bank of Australia's April 7 meeting revealed that members of the monetary policy board said the central bank remains fully committed to providing support to individuals and business as they fight against harsh economic conditions resulting from the Covid-19 virus. The members added that the Australian financial system continues to be resilient in the face of the pandemic.

At the meeting, the board had kept its benchmark interest rate steady at the record low of 0.25 percent and the targeted yield on three-year government bonds at around 0.25 percent.

In the currency market, the Australian dollar is lower against the U.S. dollar on Tuesday. The local unit was quoted at $0.6334, compared to $0.6362 on Monday.

The Japanese market is declining after crude oil futures turned negative for the first time ever and on lingering worries about the economic impact of the coronavirus pandemic.

The benchmark Nikkei 225 Index is losing 227.84 points or 1.16 percent to 19,441.28, after touching a low of 19,353.99 in early trades. Japanese shares closed lower on Monday.

Market heavyweight SoftBank is declining more than 1 percent and Fast Retailing is lower by almost 2 percent.

The major exporters are mixed on a stronger yen. Sony is adding 0.4 percent and Panasonic is edging up 0.1 percent, while Canon is declining more than 1 percent and Mitsubishi Electric is down 0.7 percent.

In the tech space, Tokyo Electron is losing almost 2 percent and Advantest is unchanged. Among automakers, Honda is declining almost 2 percent and Toyota is edging up 0.1 percent.

In the oil sector, Japan Petroleum is adding 0.2 percent while Inpex is lower by 0.4 percent after crude oil futures turned negative overnight for the first time ever.

ANA Holdings has slashed its earnings outlook for the 2019 business year due to the coronavirus pandemic. Shares of the operator of All Nippon Airways are adding 0.5 percent.

Among the other major gainers, Takara Holdings is rising more than 4 percent while Takeda Pharmaceutical and Meiji Holdings are advancing almost 2 percent each.

Conversely, JGC Holdings is losing more than 4 percent, while Yamaha Corp. and Sompo Holdings are lower by almost 4 percent each. Sumitomo Heavy Industries, Japan Steel Works, Toyota Tsusho Corp. and Hino Motors are declining more than 3 percent each.

In the currency market, the U.S. dollar is trading in the upper 107 yen-range on Tuesday.

Elsewhere in Asia, Taiwan and Hong Kong are losing more than 2 percent each, while South Korea, Indonesia and Malaysia are lower by almost 2 percent each. Shanghai, Singapore and New Zealand are declining more than 1 percent each.

On Wall Street, stocks closed lower on Monday as traders cashed in on last week's gains amid lingering concerns about the economic impact of the ongoing coronavirus pandemic. A historic drop by the price of crude oil also weighed on the markets, with a crude futures contract turning negative for the first time ever.

The Dow plunged 592.05 points or 2.4 percent to 23,650.44, the Nasdaq slumped 89.41 points or 1 percent to 8,560.73 and the S&P 500 tumbled 51.40 points or 1.8 percent to 2,823.16.

The major European markets all moved to the upside on Monday. While the French CAC 40 Index advanced by 0.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index both climbed by 0.5 percent.

Crude oil prices saw an historic plunge on Monday, and with no one to buy the contract, WTI crude futures for May tumbled below zero. Crude for May delivery plummeted $55.90 to a negative $37.63 a barrel, while the more actively traded crude for June delivery plunged $4.60 or about 18.4 percent to $20.43 a barrel.

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