Friday 05.20 BST
Stocks across Asia and commodity-linked currencies were weaker on Friday after the price of oil closed below $50 a barrel for the first time in five months.
A resurgence in the US shale industry and concerns about Opec’s ability to curb output have cast doubt on the sustainability of a recovery in the oil market.
Brent crude, the international benchmark, was down as much as 3.6 per cent in Asia on Friday at $46.64 a barrel, having dropped 4.8 per cent on Thursday to close below the $50 mark for the first time since November 29, just before Opec approved its first supply cuts in eight years.
West Texas Intermediate was down as much 3.9 per cent at $43.76, the first time below $44 a barrel since mid-November.
Executives at a number of oil companies that have reported solid results over the past week have also flagged doubts about the outlook, saying they still expected volatility and uncertainty in commodity markets.
Iron ore futures were down by as much as the daily limit of 8 per cent to Rmb458.5 ($66.48) a tonne on the Dalian Commodity Exchange. It was their level in six months, and iron ore is now eyeing an 8.4 per cent decline for the week, its worst weekly performance since late March.
The futures price for coking coal, used in steelmaking, was down 5 per cent in Dalian, while futures for thermal coal, used in electricity generation, were off 1.7 per cent on the Zhenghou Commodity Exchange. Prices have also come under pressure amid a rise in short-term borrowing costs in China to two-year highs, squeezing liquidity.
Gold was up 0.3 per cent at $1,231.21 an ounce, but by Thursday had fallen for four straight sessions, the longest losing streak in two months.
Falls in commodity prices weighed on the Australian market, where the S&P/ASX 200 was down 0.8 per cent. The energy and materials sectors were down 2.7 per cent and 2.4 per cent, respectively, led by coal producer Whitehaven Coal, which was off 6.5 per cent. Oil and gas producers Woodside Petroleum and Santos were each down more than 2 per cent.
Hong Kong’s Hang Seng lost 1.2 per cent, with PetroChina and China Shenhua Energy both falling more than 3 per cent.
China’s Shanghai Composite was down 0.7 per cent, while the technology-focused Shenzhen Composite shed 0.3 per cent.
Japan and South Korea were closed for public holidays.
The drop in commodity prices had resources-linked currencies under pressure. The Norwegian krone tumbled alongside the turnround in the oil price, and was down 0.5 per cent to be the worst-performing major currency.
The Australian dollar, down 0.4 per cent to a four-month low of $0.7379, was next worse, followed by a 0.3 per cent drop for the Mexican peso and a 0.3 per cent fall for the Canadian dollar.
The dollar index, a measure of the US currency against a basket of global peers, was down 0.1 per cent at 98.741 ahead of closely watched US non-farm payrolls data due later on Friday.
The Japanese yen reversed early declines to be 0.2 per cent stronger at ¥112.21 per dollar. The currency on Thursday traded weaker than ¥113 to the dollar for the first time in almost two months.
What to watch
The euro was flat at $1.0988 ahead of Sunday’s presidential election between the centrist Emmanuel Macron and far-right candidate Marine Le Pen, which the former is expected to win.
The British pound was 0.1 per cent weaker against the dollar at $1.2817 amid a local election that might provide a useful gauge of the mood in the UK ahead of June’s snap national election.
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