Oil prices extend losses shares stage tepid recovery

Oil prices continued their downward spiral to fresh five-and-a-half-year lows Wednesday, leaving equity markets struggling to recover after a recent sell-off, while Greek political turmoil sent the euro skidding.

More losses on Wall Street and in Europe kept investors on edge as they await the release of US Federal Reserve minutes later in the day and jobs data on Friday.

Tokyo, which lost more than three percent Tuesday, edged up just 2.14 points to close at 16,885.33, and Seoul was also marginally higher, tacking on 1.38 points to 1,883.83. Sydney lost 0.21 percent, or 11.19 points, to 5,353.61.

However, Shanghai added 0.67 percent, or 22.51 points, to 3,373.94 while Hong Kong clocked up 0.83 percent, or 195.85 points, to 23,681.26.

“With the US markets again under pressure, the lead for Asia looks bleak,” Evan Lucas, a markets strategist in Melbourne at brokerage firm IG, told Bloomberg News. “Until oil finds bottoms, the markets will remain in a downward trajectory.”

Global stock markets have been routed at the start of the year as oil prices continue to slump — losing more than 50 percent since June — and dealers take profits after some healthy gains in 2014.

On Tuesday the two main oil contracts, West Texas Intermediate and Brent North Sea crude, sank more than two dollars owing to a supply glut, concerns about the economies of Europe, China and Japan and instability in Greece.

On Wednesday, WTI, the US benchmark for delivery in February, fell 73 cents to $47.20 — lows not seen since April 2009.

Brent for February dropped $1.05 to $50.05. At one point in afternoon trade it fell below $50 for the first time since May 2009.

– Euro struggles –

US shares provided a negative platform, with Wall Street’s three main indexes taking a blow from the crude plunge, while data showed growth in the service sector slowed in December.

The Dow fell 0.74 percent, the S&P 500 lost 0.89 percent and the Nasdaq sank 1.29 percent.

On currency markets the euro faced further selling pressure owing to the oil losses as well as fears that Greece could exit the eurozone if an anti-austerity opposition party wins a general election later in the month.

Analysts have warned a victory for the far-left Syriza party could see them tear up stringent measures required under the IMF-EU bailout of the country, which could in turn lead it out of the currency bloc.

A weekend report in Germany’s Der Spiegel quoted Berlin sources as saying they consider Greece’s exit as “almost inevitable” if Syriza wins.

The euro fell to $1.1839 at one point in morning Asian trade — its lowest since February 2006 — before recovering to $1.1883. It had finished at $1.1892 in New York Tuesday.

It also fell to 141.53 yen from 140.93 yen in US trade.

The dollar was at 119.12 yen early Wednesday against 118.50 yen in New York.

Gold fetched $1,215.53 an ounce, compared with $1,210.89 on Tuesday.

In other markets:

— Taipei rose 0.35 percent, or 31.75 points, to 9,080.09.

Taiwan Semiconductor Manufacturing Co was 0.37 percent higher at Tw$134.0 while Hon Hai Precision Industry added 0.83 percent to Tw$85.2.

— Wellington ended a touch lower, giving up 3.32 points to end at 5,558.06.

Chorus was down 0.76 percent at NZ$2.615 and Fletcher Building shed 1.58 percent to NZ$8.09 but Air New Zealand jumped 1.39 percent to NZ$2.55.

— Manila added 0.67 percent, or 48.67 points, to 7,326.41.

Universal Robina gained 2.87 percent to 197 pesos, LT Group rose 3.2 percent to 12.90 pesos while Resorts World gained 1.17 percent to 7.75 pesos.

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