Hong Kong, October 27: Asian shares followed Wall Street lower on Tuesday with resources stocks under pressure as the price of oil stayed below USD 79 and with investors growing increasingly worried about the recovery of the world economy.
Japan’s Nikkei index (.N225) was down 1.3 percent with shares in Mitsubishi (8058.T) skidding 4.3 percent as trading houses were hurt by lower oil and commodity prices in the past day.
Oil was at USD 78.78, below USD 79 a barrel for a fourth day, amid concerns that a sluggish global economic recovery will limit fuel demand. It hit a year high at USD 82 last Wednesday.
Investor concern that economic recovery could be slow lent support to the dollar and encouraged profit taking in riskier assets including high-yielding currencies such as the Korean won and the Philippine peso.
The won was nearly 1 percent lower at 1,188.40 to the dollar while the Philippine peso hit a one-month low at 47.30 to the dollar. However, with the world economy recovering and Asian interest rates likely to rise before U.S. rates, analysts saw the dollar rebound, and the falling oil price, as temporary.
“While the U.S. dollar strengthened overnight, we do not think this will be a trend,” said Song Kyung-keun, an analyst at Dongbu Securities in Seoul. “To what extent the won and crude prices strengthen are two key uncertainties.”
In Australia, shares were down 1 percent with mining giants BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) were both down 1.7 percent.
The MSCI index of Asia Pacific stocks traded outside Japan (.MIAPJ0000PUS) was 1 percent lower while the Thomson Reuters index of regional shares (.TRXFLDAXPU) was down 1.6 percent. ]
–Agencies