Asian Shares Mostly Down on Skepticism About OPEC Deal

Expectations that an Organization of the Petroleum Exporting Countries production deal was unraveling dominated Asian trade Monday, adding volatility to regional stocks and currencies.

OPEC officials said Saudi Arabian oil officials won't attend a meeting Monday with Russia and others ahead of the 14-nation cartel's closely watched meeting Wednesday.

Japan's Nikkei 225 was down 0.8% and Australia's S&P/ASX 200 was down 0.4%, while Hong Kong's Hang Seng Index was up 0.5%.

The price of Brent crude, a global benchmark, fell 3.6% on Friday. This showed the market was starting to price in a failure at this week's meeting, said Ric Spooner, chief market analyst at CMC Markets. Brent crude extended its decline Monday, shedding 0.4% in early Asia trade.

"We could see a big rally if they see a plausible agreement [on a production cut]," said Mr. Spooner. "But assuming that OPEC does not agree, for the next few months it does set up for a lower oil price [in the] high 30s to low 40s range. We've still got big inventories and supply overhang."

The oil gloom hit Asia's biggest energy stocks. In Australia, Woodside Petroleum was down 2.5% and BHP Billiton, whose second-biggest division is petroleum, was down 2.3%. Japanese oil explorer Inpex was down 1.7% and in Hong Kong, Chinese oil major Cnooc fell 1.4%.

The drop in oil prices is hitting U.S. inflation expectations, which has pulled down U.S. Treasury yields, which has finally knocked back a lengthy dollar rally.

The yield on 10-year U.S. Treasurys was last at 2.330%, down from 2.359% on Friday, according to Thomson Reuters.

Asian currencies were broadly up Monday. The Korean won gained 0.4% and the Singapore dollar rose by 0.5%.

The Japanese yen was the biggest gainer in Asia on Monday, rising 1.3%, partly as traders sought the safety of the yen on the view OPEC's production deal was unraveling.

"Guys are very very nervous about the oil scenario and you see that expressed in the sensitive pair," said Oanda senior foreign-exchange trader Stephen Innes, referring to the U.S. dollar and the yen.

Toyota Motor fell 1.2%, as Japanese exporters are less competitive when the yen strengthens.

Japanese financial companies were hit by lower yields for Japanese and U.S. government bonds, as the institutions depend on investment income from the securities. Nomura Holdings was off 1% and Dai-ichi Life Holdings fell 1.4%.

The yield on 10-year Japanese government bonds was last at 0.015%, sharply lower than 0.037% on Friday.

The Hang Seng Index strengthened after news Friday that the trading link connecting the Shenzhen and Hong Kong stock exchanges will open Dec. 5, allowing foreigners to invest in China's fastest-growing companies.

Other important market events this week include the release of U.S. jobs figures and purchasing managers' indexes, including the U.S. ISM manufacturing PMI data due Thursday.

Rachel Rosenthal, Kenan Machado and Rhiannon Hoyle contributed to this article.

Write to Willa Plank at [e-mail]

(END) Dow Jones Newswires

November 27, 2016 23:45 ET (04:45 GMT)

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