Asian shares track US retreat as oil nurses losses

Japanese equities fell on their first day of trading this week, tracking losses in the US where the S&P 500 Index dropped from a record high.
Japanese equities fell on their first day of trading this week, tracking losses in the US where the S&P 500 Index dropped from a record high.PHOTO: EPA

WELLINGTON (BLOOMBERG) - Asian stocks retreated amid declines among banks and energy shares as crude oil nursed losses and haven assets found support.

Japanese equities fell on their first day of trading this week, tracking losses in the US where the S&P 500 Index dropped from a record high. US crude traded around US$52 (S$74.50) a barrel after sinking the most in more than five weeks amid concern over Iraq's compliance with Opec's production cuts.

Anxiety over political developments has crept back into markets in the new year, with investors expressing their concern not through bond buying but via the currency market. Meanwhile, the Dow Jones Industrial Average has failed to take on the 20,000-point milestone amid anxiety shares rose too far too fast in the wake of Mr Donald Trump's presidential win.

"The mood - certainly on social media and to an extent on trading floors - suggests bearish sentiment is on the rise, even though US equity markets have really only fallen modestly and there hasn't been any one piece of news that's been catching attention," said Mr Chris Weston, chief markets strategist in Melbourne at IG Ltd.

The Topix index fell 0.1 per cent as of 9.21am Tokyo time, as more than twice as many stocks declined as rose on the dollar-denominated MSCI Asia Pacific Index.

Australia's S&P/ASX 200 Index dropped 0.7 per cent as financial and energy shares slipped by at least 1 per cent, while the Kospi index in Seoul lost 0.2 per cent.

The S&P 500 fell 0.4 per cent on Monday (Jan 9) after closing Friday at an all-time high, capping a 6.4 per cent advance since Mr Trump's election. The Dow Average slipped by 76 points to 19,887.38. It has been stuck in a 250-point range for the past month.

The yen edged up another 0.1 per cent to 115.89 per US dollar after rallying 0.8 per cent on Monday.

The won strengthened 0.7 per cent and the Thai baht gained 0.3 per cent.

The pound touched its lowest level since Oct 28 on Monday after British Prime Minister Theresa May said over the weekend that negotiations on Brexit will be about "getting the right relationship, not about keeping bits of membership".

A so-called hard Brexit may push the Bank of England to keep rates lower for longer, while weakening the pound and supporting foreign-focused companies in the main stock index.

The Bloomberg Dollar Spot Index dropped 0.1 per cent, leaving it down 1 per cent since touching a 14-year high on Jan 3.

West Texas Intermediate crude was little changed at US$52.03 a barrel after sinking 3.8 per cent last session as an increase in US drilling offset signs that Opec members are sticking to planned output cuts.

Gold was up 0.1 per cent in the spot market to US$1,182.67 an ounce with demand forecast to rise ahead of Chinese New Year. It gained 0.7 per cent on Monday.