Via MarketWatch : Shares in oil, mining companies fall due to rising dollar.
A sharp decline in commodity prices and a selloff in U.S. Treasurys weighed on global sentiment, sending key Asia-Pacific markets lower early Friday.
Some equity investors were taking a breather from a recent buying spree ahead of comments from Federal Reserve Chairwoman Janet Yellen later today. The timing of the Fed’s next rate increase will be in focus.
Australia’s S&P/ASX 200 (XJO, -0.81%) declined 1%, with a decline in commodities hurting large-cap shares. Elsewhere, Japan’s Nikkei Stock Average (NIK, -0.49%) was down 0.2%, while Singapore’s Straits Times Index (STI, -0.45%) fell 1% and Hong Kong’s Hang Seng Index (HSI, -0.74%) declined 0.8%.
Overnight in the U.S., oil prices fell due to a stronger U.S. dollar and an increase in crude inventory. Brent, the global crude oil benchmark, fell 2.3% to $55.08 a barrel overnight and was down an additional 0.1% early in Asia on Friday.
Australian oil firm Santos (STO, -2.65%) was down 3.3%, Woodside Petroleum (WPL, -0.74%) lost 1.5% and Japan’s Inpex Corp. (1605, -2.36%) declined 3.4%.
Meanwhile, gold prices fell sharply in U.S. trade Thursday, as odds of a rate increase rose sharply. Rising stock values, which reduce the allure of gold as an investment, and a stronger dollar make the commodity expensive, weighing on prices, say analysts.
“As far as rates are concerned, the market has priced in a 90% probability of a March hike, another factor currently pushing gold down,” said Helima Croft, head of commodity strategy at RBC Capital Markets.
Australian miner Rio Tinto (RIO, -4.11%) was off 3.1% and Fortescue Metals (FMG, -5.14%) fell 4.0%. In Hong Kong, shares of gold miner Zijin Mining (2899, -4.17%) were recently down 5.2%.
The rising odds of a rate increase also prompted investors to sell short-duration bonds that earn a lower interest rate. The yield on the three-month U.S. Treasury bill settled at 0.668%, the highest point since October 2008. Bond prices move inversely to yields.
This weighed on Japanese financial firms, which are large holders of U.S. bonds. Mitsubishi UFJ Financial (8306, -0.59%) was off 0.7% and Nomura Holdings (8604, -0.56%) lost 0.4%.
“The rate of change in market pricing around the Fed rate hike is a bit of a concern,” said Chris Weston, chief market strategist at IG Markets.
In South Korea, shares fell after local media reported that China has told major travel companies to stop selling tours to Korea, due to its intent to move ahead with an anti-missile defense system.
Among major travel-related stocks in Korea, flag carrier Korean Air Lines (003490, -4.77%) was down 4.8%, while rival Asiana Airlines (020560, -6.41%) was off 5.0%. South Korea’s Kospi index (SEU, -1.14%) was recently down 1%.