Tue, Feb 01, 2011 - Page 10 News List

Egypt crisis sends oil up, shares down

GROWING CONCERNS:Most Asian stock markets dropped, with the Nikkei leading the way, shedding 1.18 percent. The Shanghai Composite Index, however, rose 1.38 percent


Oil prices crept toward the US$100 a barrel mark yesterday, as traders grew increasingly worried about unrest in Egypt, while stock markets in Asia mostly fell.

Share prices partly lost ground due to last week’s sharp falls on Wall Street — the result both of instability in Egypt and poor corporate results.

However, resource stocks gained on higher prices for oil and gold.

Tokyo’s Nikkei index ended down 1.18 percent, or 122.42 points, at 10,237.92 and Sydney’s S&P/ASX 200 index dropped 0.44 percent, or 21.0 points, to 4,753.9, while Hong Kong’s Hang Seng fell 0.72 percent, or 169.68 points, to 23,447.34.

However, the Shanghai Composite Index rose 1.38 percent, or 37.94 points, to 2,790.69, with gains among oil companies and gold miners.

World oil prices rose, with the most obvious threat from Egypt’s turmoil being the risk that supplies through the vital Suez Canal could be disrupted.

New York’s main contract, light sweet crude for March delivery, was up US$0.16 at US$89.50 per barrel in afternoon trade. Brent North Sea crude for March rose US$0.13 to US$99.55.

The gap between Brent and New York has reached unprecedented levels in recent days owing to the high level of crude stockpiles at the Cushing storage depot in Oklahoma.

The price rises were likely to fuel expectations that oil could top US$100 a barrel, threatening the global economic recovery.

Sharon Zollner, senior economist at ANZ Bank in Wellington, told Dow Jones Newswires that besides the risk of Suez disruption, “The greater fear is that the turmoil could spread to other Middle East countries, including even Saudi Arabia. If that happens, then all bets on oil prices are off.”

Tokyo saw heavy losses among companies directly exposed to Egypt, where Egyptian President Hosni Mubarak is under intense pressure from continued mass unrest, amid calls by Western governments for a peaceful transition. Among Japanese stocks losing ground, Nissan Motor said it suspended production at its plant near Cairo at least for this week.

Asian markets were not helped by Wall Street’s poor performance — the blue-chip Dow Jones Industrial Average lost 0.41 percent over last week after eight straight weeks of gains. Sentiment was dented by disappointing earnings reports from Amazon, Microsoft and Ford Motor Co.

However some traders were unworried about any knock-on from the situation in Egypt.

Hong Kong pared back some of its losses late in the day.

In Shanghai, Simon Wang (王驍敏), an analyst from Guoyuan Securities (國元證券), was mostly optimistic, saying worries about a likely Chinese rate hike had diminished ahead of holidays at the end of the week.

“The market will likely rise slightly ahead of the Lunar New Year holiday as it seems that the chance for another hike in interest rate is slim for now,” Wang told Dow Jones Newswires.

Risk-averse investors kept away from the euro in Asia.

The European single currency stayed at US$1.3610 in Tokyo afternoon trade after slumping to a low of US$1.3569 in early trade, compared with US$1.3609 in New York late on Friday, when it plunged because of escalating tension in Egypt.

The single European currency dropped to ¥111.58 from ¥111.72.

The US dollar fetched ¥82.05, flat from ¥82.09 in New York on Friday.

Gold closed at US$1,333.30 to US$1,334.30 an ounce in Hong Kong, up from Friday’s close of US$1,314.50 to US$1,315.50, amid a general rise in commodity prices on the back of the Egyptian unrest.

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