Asian Shares Retreat as Oil Falls, Fed Euphoria Fades

Asian markets opened Friday on a down note after a strong week, as oil fell to a fresh low since the financial crisis and the rally following the Federal Reserve's interest-rate rise dissipates.

Japan's Nikkei Stock Average fell 0.6%, Australia's S&P/ASX 200 slipped 0.7% and South Korea's Kospi fell 0.5%.

The retreat Friday comes a day after markets rallied to the Federal Reserve's decision to raise interest rates for the first time in almost a decade, a confidence boost about the health of the world's biggest economy. Investors appear to be shifting focus back to some of the factors that pressured stocks in recent weeks, such as the effects of the strengthening dollar on commodity prices, like oil.

"The implications of further energy price declines are clearly putting the brakes on equities at the moment," wrote Angus Nicholson, market analyst at brokerage IG, in a note. "A wave of defaults and bankruptcies in the energy sector still looks likely to come, and these concerns are certainly weighing on markets."

The slide in oil refreshes worries that energy firms will have trouble paying their debts, after a rout in the junk-bond market rattled investors in recent days.

U.S. stocks fell after a three-day winning streak, as energy shares declined.

U.S. oil prices slipped 1.6% to $34.95 a barrel overnight after stockpile data showed no pause in the flood of excess oil. Brent, the global benchmark, fell 33 cents, or 0.9%, to $37.06 a barrel on ICE Futures Europe, the lowest level since December 2008.

Materials and energy shares in Australia were down 2.2% and 0.4%, respectively. Those sectors have fallen nearly 5% and 13% so far this month as a commodities rout deepens.

Liquefied Natural Gas Ltd. was down 8.2% and Beach Energy Ltd. was off 3.3%.

Investors remain worried that the end of a period of near-zero rates at a time of tepid global growth will weigh on emerging markets, including in Asia. Ultralow interest rates have boosted equity markets in recent years.

"It's a delicate balance" that the Fed faces in the coming months in pacing subsequent interest rate increases, said Andrew Swan, head of Asian equities at BlackRock Inc. The central bank has signaled that it will raise interest rates gradually in the future.

Mr. Swan said the firm shifted into Asian equities over the past month, expecting investors to move back into riskier assets as worries eased about the first rate increase by the U.S. central bank. Further bets would depend on whether the dollar continues to strengthen or stabilizes, he added.

The dollar has gained 1.3% against the Japanese yen so far this week, adding to its rise against most global currencies for more than two years now. The Japanese yen was last up 0.1% at ¥ 122.49 in Asia trade Friday.

Gold prices were up 0.3% at $1,052.90 a troy ounce.

Prices for Brent crude oil were down 0.3% at $36.95 a barrel.

In other commodities, copper prices closed lower, with copper for March delivery down 1.4% overnight on the Comex division of the New York Mercantile Exchange.

Write to Chao Deng at [e-mail]

(END) Dow Jones Newswires

December 17, 2015 20:55 ET (01:55 GMT)

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