Asian Shares Pressured by Plunge in Oil Prices, Japanese Exports

The major Asia-Pacific stock indexes finished lower last week with volatility driven by a multitude of factors including central bank activity from China, tumultuous swings in crude oil and disappointment from a previously positive coronavirus drug study. Dismal economic data was also at the forefront with Japan reporting weaker exports and the U.S. labor market getting destroyed again by a jump in weekly jobless claims. Asian investors were also influenced by rumors surrounding the death of North Korean President Kim Jong Un.

For the week, Japan’s Nikkei 225 Index settled at 19262.00, down 635.26 or -3.19%. Hong Kong’s Hang Seng Index closed at 23831.33, down 548.67 or -2.25% and South Korea’s KOSPI Index finishing at 1889.02, down 25.52 or -1.33%.

In China, the Shanghai Index settled at 2808.53, down 29.96 or -1.06% and in Australia, the S&P/ASX 200 Index finished at 5242.60, down 244.90 or -4.46%.

Oil Crash Pummels Asia-Pacific Stocks

Asia-Pacific stock markets fell early in the week, as a collapse in oil prices brought on by oversupply and a shortage of storage further exposed the depth of economic damage from the coronavirus outbreak and sent investors looking for shelter.

U.S. WTI crude oil fell into negative territory for the first time in history as traders had to pay $36.63 to get rid of each barrel of oil under the expiring May futures contract.

Although crude oil rallied later in the week, traders see no end in sight to a swelling global oversupply as the pandemic has obliterated demand for fuel and lead to a dearth of storage space. Oil demand also shriveled as worldwide lockdowns have kept people at home and businesses shuttered in efforts to contain the spread of the highly contagious virus.

Asian shares fell on the news because equity investors saw swooning oil prices as a signal to dump risky assets and move to cash.

Japan’s Nikkei Falls as Exports Slump in March as Coronavirus hits US, Chinese Demand

Japan’s Nikkei 225 Index fell from near a six-week high last week after data showed Japan’s exports slumped the most in nearly four years in March as US-bound shipments, including cars, fell at the fastest rate since 2011, highlighting the damage the coronavirus pandemic is inflicting on global demand and trade.

Investors pitched their risky positions in stocks as the bleak data underscored the challenges Prime Minister Shinzo Abe’s government faces in dealing with a collapse in activity that is expected to send the global economy into its deepest slump since the Great Depression of the 1930s.

In Other News

Asian shares ended the week under selling pressure after investors expressed disappointment in Gilead Sciences’ drug remdesivir, which did not improve coronavirus patients’ condition, according to a document accidentally published by the World Health Organization and reported by Financial Times.

Investors were also nervous after reports surfaced saying North Korea’s leader Kim Jong Un may be “gravely ill”. This news is important because his death would threaten the stability in the region.

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James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.