Asian shares drop, oil and commodity currencies tumble after Doha deal fails

Saudi Arabia's minister of Oil and Mineral Resources Ali al-Naimi (centre) arrives for the Opec meeting in Doha, on April 17, 2016.
Saudi Arabia's minister of Oil and Mineral Resources Ali al-Naimi (centre) arrives for the Opec meeting in Doha, on April 17, 2016. PHOTO: AFP

TOKYO (REUTERS) - Asian shares dropped when markets opened on Monday (April 18), dragged down by tumbling crude oil futures after producers' weekend talks failed to address the global supply glut.

Some 18 oil exporting nations had gathered in the Qatari capital of Doha to try to agree to stabilise output at January levels until October 2016. The pact fell apart after Saudi Arabia demanded that Iran join in.

Brent crude futures tumbled about 5.2 per cent to US$40.86 while US crude slid about 5.5 per cent to US$38.15.

"Given the strong correlation between the oil price and equities, Asian markets are not looking like they will have a good start to the week," said wrote Angus Nicholson, market analyst at IG in Melbourne. "Commodities are likely to drive the pullback in equities today, with materials and energy stocks in for a difficult session."

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.6 per cent lower in early trade.

S&P 500 e-mini futures dropped 0.6 per cent. Wall Street ended with modest losses on Friday but major indexes still posted weekly gains.

The Nikkei stock index fell 3.2 per cent, as investors weighed the impact of devastating earthquakes in western Japan's Kyushu on ma`nufacturers' supply chains.

A 7.3 magnitude tremor struck early on Saturday, following a smaller temblor on Thursday, centred in the region's Kumamoto prefecture, an important manufacturing hub.

The plunge in crude oil prices took a large slice out of commodity currencies.

The greenback gained 1.2 per cent against the Canadian dollar to C$1.2969 while the Australian dollar shed 1.1 per cent to US$0.7641.

The Japanese yen, a perceived safe-haven, benefited from the turmoil, with the dollar skidding 0.6 per cent to 108.07 yen .

The euro was down 0.4 per cent at 122.10 yen after earlier dropping to 121.95, its lowest since April 2013.

The euro edged up about 0.2 per cent to US$1.1300, while the dollar index edged down 0.1 per cent to 94.656.