Energy in Asia was down overnight and it spilled over into Hong Kong where the sector dropped almost 5%, pushing the Hang Seng down almost 2%. The Nikki also fell nearly 2% and the yen rose against the dollar to 118.09.
Oil prices and equities have been tightly correlated for a while now as investors fret about the condition of the global economy and the ending of monetary stimuli notwithstanding the recent statements at Davos to calm and reassure the markets.
On Monday crude in the U.S. fell to $30.34. Prices are down nearly 7% so far this week as investors see no sign of producers cutting output any time soon. Oil declined in Asia 2% to close at $29.90 a barrel. On top of that Iranian oil coming online adding to a market already flooded doesn't soothe the situation.
Other markets down were the Korean KOSPI, off 1.2% and thr Shanghi Composite down 2%. Markets in India and Australia were closed for a holiday. Gold continued to benefit from all the weakness and concern, trading at $1112.80 in early trading, up 0.7%.
Since both the Bank of Japan and thr Fed have policy meetings on the docket this week investors are seeming hoping for a glimmer positive news that the Fed will roll back its planned four rate hikes tentatively set for this year and the BOJ will continue or even increase it monetary stimulus packages.
Probably good advice for investors to follow here is: Don't hold your breath.
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