Asia markets drop as energy stocks sell off after Doha meeting

Tokyo (Apr 18)  Asia markets dropped Monday, as oil tumbled after top oil producers failed to reach an agreement to freeze production and Japan shares took a hit from large earthquakes last week.

Japan's Nikkei 225 led the sell-off in Asian markets, with the benchmark index closing down 572.08 points, or 3.4 percent, at 16,275.95.

Across the Korean Strait, the Kospi fell 5.61 points, or 0.28 percent, to 2,009.10. In Australia, the ASX 200 closed down 20.43 points, or 0.4 percent, at 5,137.05. In Hong Kong, the Hang Seng index finished down 154.97 points, or 0.73 percent, at 21,161.50.

Chinese markets also lagged, with the Shanghai composite closing down 44.04 points, or 1.43 percent, at 3,034.06, and the Shenzhen composite finishing down 26.17 points, or 1.32 percent, at 1,952.40.

Oil prices tumbled more than 5 percent in early Asian hours, before paring some of the losses later in the day. As of 4:16 p.m. HK/SIN time, U.S. crude futures were down 4.71 percent at $38.46 a barrel, while global benchmark Brent fell 4.52 percent to $41.15.

The commodity sold off after the meeting between the world's largest oil producing countries in Doha failed to produce a deal to freeze output which was aimed at boosting sagging crude prices.

Oil prices retraced some of the losses after reports said oil and gas workrs in Kuwait went on strike starting Sunday.

Reuters reported the strike was to protest the government's plan to cut some of the workers' benefits and wages, and led to a reduction in Kuwait's crude oil output and refining production.

Energy stocks in Asia closed mostly lower, with Santos selling off 6.95 percent, Oil Search off 4.31 percent and Inpex down 3.05 percent.

Kuwaiti Minister of Finance and Minister of Oil Anas al-Saleh arrives for the oil producers' meeting in Doha, Qatar, on April 17, 2016. The world's largest oil producing countries failed to agree on a deal to freeze output at January levels, which sent oil prices tumbling over 5 percent.   

Karim Jaafar | AFP | Getty Images

Kuwaiti Minister of Finance and Minister of Oil Anas al-Saleh arrives for the oil producers' meeting in Doha, Qatar, on April 17, 2016. The world's largest oil producing countries failed to agree on a deal to freeze output at January levels, which sent oil prices tumbling over 5 percent.

In Japan, a combination of a stronger yen and a powerful second earthquake striking the southern island of Kyushu on Saturday sent stocks lower, with risk sentiment taking a hit.

Reuters reported the 7.3 magnitude earthquake caused widespread damage, with reports of fires, power outages, collapsed bridges and gaping holes in the earth.

Manufacturers including Honda, Toyota, Renesas Electronics and Sony halted production after the tremors, according to Reuters.

The yen saw fresh strength against the dollar, breaking the 108 level Monday morning; late last week, the yen traded at the 109 level against the dollar. As of 4:22 p.m. HK/SIN time, the dollar/yen pair was at 108.31.

Japanese exporters sold off sharply, with shares of auto players Toyota, Nissan and Honda closing down between 2.83 and 4.76 percent. Shares of Sony were down 6.78 percent, while Renesas tumbled 11.76 percent.

A stronger yen is usually a negative for exporters as it affects their overseas profit when converted to local currency.

Source: CNBC