Asia Markets Slide, Dragged by Oil Plunge and Trump Fears
Asian markets mostly sank Thursday with energy firms swiped by a dive in oil prices, while traders were also spooked by a report that President Donald Trump was being investigated for possible obstruction of justice.
Crude tanked three percent on data Wednesday showing a smaller-than-forecast drop in US stockpiles and an International Energy Agency warning that global output will increase faster than demand next year as US production ramps up.
The news followed the OPEC cartel's warning that higher US output was hurting its drive to address a long-running supply glut, which has hammered the oil market. Both main contracts extended losses in Asian trade.
"Energy stocks will have a tough day at the office, with oil getting smashed 3.5 percent on higher gasoline inventory and we see US crude trading into the May lows now," Chris Weston, Australia-based chief market strategist at IG Markets, said.
Hong Kong-listed CNOOC sank 1.5 percent and PetroChina was 1.2 percent off while in Sydney Woodside Petroleum shed 1.7 percent and Rio Tinto was down 3.7 percent. Inpex lost 0.8 percent in Tokyo.
The losses hurt broader stock markets, with Tokyo down 0.3 percent, Sydney losing 1.2 percent, Seoul off 0.5 percent and Singapore slipping 0.5 percent.
But Shanghai closed 0.1 percent up.
Hong Kong retreated 1.2 percent, with property firms also suffering hefty selling after the Federal Reserve lifted interest rates and signalled further tightening measures in the future. The city's de facto central bank followed the Fed's rate hike on Thursday, owing to a monetary policy link to the US.
- 'Unequivocally hawkish' -Markets were given a jolt by a Washington Post story saying top intelligence officials would be questioned over allegations Trump tried to get the FBI to back away from a probe into former national security adviser Michael Flynn.
The news comes as special prosecutor Robert Mueller looks into allegations of collusion between Trump's campaign and Russia to sway the outcome of last year's presidential election.
The report added to concerns the tycoon's planned big-spending, tax-cutting, deregulating agenda -- which helped fuel a months-long global rally from November -- could founder.
Traders were sent scurrying last month when sacked FBI chief James Comey also said Trump had urged him to lay off Flynn. The White House has denied all the claims.
The crisis engulfing the president, and the uncertainty that has brought, has kept investors on edge for months.
The dollar struggled even after the Fed rate hike and its more hawkish outlook for monetary policy, while also unveiling plans to suck cash out of the financial system by scaling back the bonds on its balance sheet.
The US central bank said it expected to lift borrowing costs for a third time this year, brushing aside weaker inflation and consumption data in recent weeks.
Greg McKenna, chief market strategist at AxiTrader, said: "The Fed was unequivocally hawkish. As a result, the Fed signalled that it is not to be swayed from the path of raising rates and reducing the size of its balance sheet.
"Another hike is expected in 2017 and possibly four more in 2018 -- as well as the balance sheet shift."
In early European trade London shed 0.2 percent, Paris slipped 0.3 percent and Frankfurt gave up 0.1 percent.
- Key figures around 0820 GMT - Tokyo - Nikkei 225: DOWN 0.3 percent at 19,831.82 (close)
Hong Kong - Hang Seng: DOWN 1.2 percent at 25,565.34 (close)
Shanghai - Composite: UP 0.1 percent at 3,132.49 (close)
London - FTSE 100: DOWN 0.2 percent at 7,459.70
Euro/dollar: DOWN at $1.1213 from $1.1220 at 2100 GMT
Pound/dollar: DOWN at $1.2742 from $1.2758
Dollar/yen: UP at 109.60 yen from 109.54 yen
Oil - West Texas Intermediate: DOWN 27 cents at $44.46 per barrel
Oil - Brent North Sea: DOWN 21 cents at $46.79 per barrel
New York - Dow: UP 0.2 percent at 21,374.56 (close)