Markets in Asia dropped on Friday, with the Nikkei tumbling, after a sell-off on Wall Street as oil remained volatile and concerns about how central banks' easing measures will affect banks' earnings persisted.
"The idea that central banks are now fully targeting the interest rate structure and putting a gun to domestic banks heads in a fight to stoke credit growth is in no way an equity friendly story," wrote Chris Weston, chief market strategist at spreadbetter IG, in a morning note. The Bank of Japan blindsided markets on January 29 by cutting its benchmark rate into negative territory in a move that's likely to weigh on banks' earnings.
S&P/ASX 200 traded down 0.75 per cent, weighed by the financial sector, which shed 0.97 per cent.
Singapore shares opened 0.1 per cent higher, with the Straits Times Index up 2.47 points to 2,540.75 at 9am, The Business Times reported.
Japan's Nikkei 225, which reopened after a public holiday on Thursday, dropped 4.17 per cent. The Nikkei 225 has been on a downward track in recent days, as the yen rapidly strengthened against the dollar. That's a negative for Japan's stocks as exporters' overseas earnings are pressured by a stronger currency when they're translated back into yen.
"There is no bones about it, the moves in this pair are nuts and the big concern here is that the Bank of Japan have pushed Japanese pension funds offshore in the hunt for returns, but these funds have largely deployed cash unhedged. So with the yen rallying significantly the translation effect on expected return is very negative," Weston said.
As of Wednesday's close, the index had ended in the red for six of the past seven sessions, and was down 24.70 per cent from its 52-week high set in June 2015.
Across the Korean Strait, the Kospi was down 0.36 per cent.
Mainland Chinese markets and Taiwan will resume trade next week after being closed for the Lunar New Year holiday this week.
Banking stocks under pressure
Asia's banks and financial stocks remained under pressure, following drops in their Europe and the US counterparts as concerns mounted over their potential performance in a low-growth and low-interest rate environment.
The so-called Big Four banks Down Under - ANZ, Commonwealth Bank of Australia, Westpac, and NAB - were down between 0.41 and 1 per cent.
Japanese banks saw steeper losses, with Mitsubishi UFJ down 3.24 per cent, SMFG lower by 3.47 per cent, Mizuho Financial shedding 4.90 per cent and Nomura falling 6.30 per cent.
South Korean brokerages were down between 0.70 and 2.69 per cent; Samsung Securities fell 2.10 per cent, while Daewoo Securities was down 1.47 per cent.
Overnight, European banking equities extended recent declines, pushing the STOXX 600 European bank index down 6.3 per cent by the end of trade.
Sweden's central bank yesterday slashed its already negative deposit rates from negative-35 basis points to negative-50 basis points.
US crude up 4.5 per cent
Oil prices remained volatile, registering gains in early Asian trade after a downward slight overnight on the back of a build-up in global inventories.
US crude retraced losses of 4.5 per cent overnight to trade up 4.54 per cent in Asian hours at US$27.40 (S$38.08) a barrel. Global benchmark Brent, which is not yet trading, slid 78 cents, or 2.5 per cent, to $30.06 per barrel overnight.
Energy plays traded mixed, with shares of Santos rising 5.41 per cent, Woodside Petroleum gaining 0.17 per cent and South Korea's S-Oil gaining 0.13 per cent. Oil Search slipped 0.46 per cent, while Japan's Inpex fell 3.16 per cent and Japan Petroleum slid 2.03 per cent.
The Wall Street Journal reported that according to UAE's energy minister, OPEC was ready to co-operate on production cuts, But skepticism in the market remained; in recent weeks both Russia and Venezuela have called for OPEC and other major oil producers to cut output and Iran has said it is ready to co-operate on output, all apparently without making any headway.
Bluescope shares up 14 per cent
Shares of steelmaker Bluescope were up 13.93 per cent, after a profit upgrade. The steelmaker projected earnings for the first half of fiscal 2016 would be A$230 million (S$230 million), up from an earlier projection of about A$180 million. Reports said the company cited accelerated cost-cutting, better margins and rising demand in Australia as reasons for the profit upgrade.
Other miners Down Under were mixed, with big producers Rio Tinto and BHP Billiton down 1.66 and 0.39 per cent respectively.
The price of gold was off 0.66 per cent at $1,238.36 an ounce during Asian hours after jumping more than 5 per cent in overnight trade to a one-year high. The precious metal is usually considered a safe-haven investment at times of market volatility.
Gold miners rallied. Shares of Newcrest were up 2.14 per cent, Evolution Mining added 6.65 per cent, Kingsgate soared 23.44 per cent and Alacer Gold tacked on 3.77 per cent.
Major indexes in the US finished lower, with the Dow Jones industrial average closing 254.56 points, or 1.6 per cent, lower at 15,660.18. The S&P 500 slipped 22.78 points, or 1.23 per cent, to 1,829.08 and the Nasdaq composite was down 16.76 points, or 0.39 per cent, at 4,266.84.