Bangkok: Asian markets started out the second half of the year Tuesday with more of the same: sinking shares and soaring oil prices.
Japan’s market fell for a ninth straight session and key indices in China and India— the region’s two biggest emerging economies—both tumbled more than 3%.
Across the region, worries focused on oil, which climbed back above $142 a barrel in Asian trading on Tuesday, near the record $143.67 touched on Monday.
Higher energy and raw materials costs are bound to raise costs for companies and could erode profits, and many analysts predict crude prices will keep rising.
“As oil prices keep hitting record highs, fears over global inflation deepened. Investors were not in the mood for buying stocks,” said Kazuhiro Takahashi, equity strategist at Daiwa Securities SMBC Co Ltd in Tokyo.
In Japan, the central bank’s closely watched “tankan” survey showed that confidence among major manufacturers sank to its lowest level in nearly five years.
Big companies also projected that profits in the first half through September would crumble an average of 17.8%.
“Many companies feel uncertain about the future,” Takahashi said.
Tokyo’s benchmark Nikkei 225 index declined 18.18 points, or 0.13%, to 13,463.20, falling for the ninth consecutive session. Sony Corp fell 1.1% but Japan’s top oil refiner Nippon Oil Corp added 2.8%.
Half-year blues: A woman walks by an electronic stock board in Tokyo, Japan
Hong Kong’s stock market was closed for a public holiday, but mainland China’s Shanghai Composite index fell to its lowest level in 16 months, declining 3.1% to 2,651.6.
Investors dumped shares as worries about the slumping market hurt finance stocks and airlines fell on concern a government decision to boost a ticket surcharge will fail to cover higher fuel costs.
“We haven’t hit the bottom yet. That’s because investors are still pessimistic at this point,” said Zhang Xiuqi, an analyst for Guotai Junan Securities.
Chinese shares have fallen sharply since hitting a high of 6,092.06 on 16 October, dogged by worries about high oil prices and a possible interest rate hike to coolinflation.
Stocks in brokerages and financial firms fell sharply Tuesday on concern the market slump might hurt profits. Haitong Securities fell 8.4% while Citic Securities was down 7.3%.
Airlines like China Southern and Shanghai Airlines also fell despite a government decision Monday to let them raise a fuel surcharge on tickets by up to 50% to cover higher fuel costs.
“The surcharge only offsets a portion of the increased fuel price, but the airline companies have to shoulder the rest, which hurts their profibility,” said Li Lei, an airline industry analyst for China Securities Ltd.
A mixed session Monday on Wall Street did little to inspire investors amid continued worries about a US recession. The Dow rose a bit to end at 11,350.01.
Indian stocks also tumbled amid worries about inflation that has risen to 13-year highs. The Sensex fell 3.7% to 12,961.68. In currency trading, the dollar fell to 105.44 yen from 106.10 yen late Monday, while the euro rose to $1.5771 from $1.5757.
The dollar’s weakness has been a contributing factor in oil’s rise, as traders buy oil contracts to offset further declines in the dollar. AP.
Joe McDonald in Beijing contributed to this report.