Asia markets fall as energy stocks come under pressure

Markets in Asia Pacific were mostly lower on Thursday, with energy plays in the region under pressure after oil prices extended their losing streak during the U.S. session.

In Australia, the ASX 200 was down 0.56 percent, with the energy sector dropping 1.25 percent. Japan’s Nikkei 225 was off by 0.29 percent in mid-morning trade, while across the Korean Strait, the Kospi gained 0.28 percent.

Hong Kong’s Hang Seng index slipped 1.19 percent. Chinese mainland shares traded lower, with the Shanghai composite down 0.33 percent, while the Shenzhen composite fell 0.25 percent.

Oil stocks in the region traded mostly lower. Santos shares were down 1.81 percent, Oil Search was off by 2.07 percent and Woodside Petroleum lost 1.62 percent. In Japan, shares of Fuji Oil fell 0.52 percent, while South Korea’s S-Oil declined 2.48 percent. Hong Kong-listed shares of CNOOC dropped 3.63 percent, while Petrochina fell 2.54 percent.

Bucking the downward trend were shares of Inpex, which were up 0.29 percent, while Japan Petroleum added 0.09 percent.

During Asian hours, oil prices traded relatively flat after falling more than 1 percent in the U.S. session on Wednesday, amid concerns over whether OPEC would cut production levels at its November meeting.

Reuters reported that these concerns likely overrode positive data from the U.S. Energy Information Administration that showed U.S. crude stockpiles fell 553,000 barrels in the previous week.

U.S. crude futures were at $49.18 a barrel, after dropping 1.6 percent during U.S. hours, while Brent was marginally up 0.04 percent at $50, following a 1.6 percent overnight decline.

“Although a lack of positive news from OPEC is being cited, I suspect the real reason is positioning in the market,” said Jeffrey Halley, senior market analyst at OANDA in a morning note.

“Producers have hedged record volumes into this spike by selling futures. The weight of that selling, in the absence of any meaningful news regarding production cuts, has the large number of freshly minted longs above $50 a barrel starting to throw in the towel,” Halley explained.

On the earnings front, South Korean electronics giant Samsung posted a third-quarter operating profit of 5.2 trillion won ($4.5 billion), which was down almost 30 percent on-year but was in line with expectations.

Samsung’s mobile revenue showed a 96 percent on-year decline, coming in at 100 billion won, following a massive recall and eventual discontinuation of its Galaxy Note 7 smartphone line.

The tech company previously said it expected an operating profit hit of more than $5 billion over the second half of 2016 and the January-March quarter of 2017 due to the Note 7 debacle.

Samsung shares climbed 1.66 percent in morning trade.

In the currency market, the dollar traded up 0.09 percent at 98.71 against a basket of currencies, after seeing declines in the previous two sessions.

Investors still wondered if the dollar had peaked near-term.

“While dollar/yen remains strong, the greenback is beginning to lose momentum versus the euro, British pound, Swiss Franc and commodity currencies,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said in a note.

But the dollar’s relative strength on Thursday morning saw the currency majors retreat slightly.

The euro traded at $1.0897 as of 11:05 a.m. HK/SIN, lower than its previous close at $1.0907. The Australian dollar retreated to around $0.7626 on Thursday morning from levels near $0.770 it reached in the Wednesday session following better-than-expected inflation numbers.

Meanwhile, the yen remained at the 104 handle against the dollar on Thursday, trading at 104.38 as of 11:04 a.m. HK/SIN, which was slightly stronger than its previous close at 104.46.

The Dow Jones industrial average rose 30.06 points, or 0.17 percent, to 18,199.33. The S&P 500 fell 3.73 points, or 0.17 percent, to 2,139.43, while the Nasdaq dropped 33.13 points, or 0.63 percent, to close at 5,250.27.

Source: CNBC