HONG KONG (AP) — Share prices sank in early trading Monday after an effort by major oil producing nations to agree on production cuts failed over the weekend.
The benchmark Nikkei 225 stock index dropped 3.0 percent to 16,344.09 in Japan, where investor sentiment was also weighed down by a stronger yen, which crimped the outlook for the country’s exporters. Hong Kong’s Hang Seng index lost 0.9 percent to 21,112.12 and the Shanghai Composite Index in mainland China lost 1.5 percent to 3,030.81. South Korea’s Kospi lost 0.5 percent to 2,004.77, while Australia’s S&P/ASX 200 edged 0.1 percent lower to 5,150.50. Most other Asian markets were also lower.
Oil prices rebounded slightly by mid-morning in Asia after falling by nearly 7 percent after Iran stayed away from a weekend meeting in Qatar of 18 oil producing nations that had been expected to reach an accord on freezing production to support crude oil prices.
“Expectations for the talks to end with an agreement were high, and the lack of one damaged the credibility of future meetings to support the oil market,” Bernard Aw of IG said in a commentary.
“Asia is set for a negative start to the week, given this development. Commodities are expected to be beaten back today, and this would have consequences for equities, especially energy and material counters,” he said.
U.S. crude oil fell $1.98 to $38.37 a barrel in electronic trading on the New York Mercantile Exchange, down 5.0 percent. It sank to a low of $37.61 a barrel, down 6.8 percent before regaining some of that loss.
Brent crude oil, which is used to price international crude oil, fell $1.95 to $41.15 a barrel early Monday, down 4.5 percent. It tumbled 7 percent in earlier trading.
Oil-related stocks were off sharply, with China’s CNOOC down 4.4 percent in Hong Kong while commodity shares such as Australian mining giant BHP Billiton losing 3 percent.
The Doha deal’s collapse gives investors a downbeat start as they enter a trading week that offers little in the way of major economic data releases, though it’s unclear how long it will drag on markets.
“At this stage, the relatively muted reaction in the local stock market this morning suggests that investors and traders are cautious about reading too much into the Doha failure,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “Reaction on tonight’s European and U.S. markets will provide greater clarity on its impact on global sentiment.”
Oil prices hit a 12-year low in January, dipping under $30 a barrel, but had risen above $40 in recent days, buoyed by bullish talks surrounding the Doha meeting.
In currency trading, the dollar slipped to 108.00 yen from 108.81 yen last Friday. The euro fell to $1.1277 from $1.1282.
Major U.S. stock benchmarks ended Friday with small losses but were up for the week. The Dow Jones industrial average fell 0.2 percent to 17,897.46, the Standard & Poor’s 500 index lost 0.1 percent to 2,080.73 and the Nasdaq composite index dipped 0.2 percent to 4,938.22.
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