Asia stocks open lower, Singapore shares drop 0.86%

Asia stocks open lower, Singapore shares drop 0.86%

Asia markets fell Tuesday morning, as pressure from a decline in oil prices pushed US equities lower overnight.

In Singapore, The Straits Times Index fell 0.86 per cent, 0r 24.32 points, to 2,811.03, The Business Times reported.

Australia's ASX 200 was down 0.75 per cent. Japan's Nikkei 225 was off by 1.31 per cent, while across the Korean Strait, the Kospi was lower by 0.65 per cent.

In Asian hours, US crude futures were down 1.04 per cent at $35.33 a barrel as of 8:24 a.m. HK/SIN time after dropping nearly 3 per cent overnight. Global benchmark Brent slid 2.5 per cent to $37.69 overnight as concerns remain over the worldwide supply glut.

Energy plays were mostly lower, with Santos losing 3.73 per cent, Woodside Petroleum down 2.12 per cent and Inpex down 4.58 per cent.

Recent comments from Saudi Arabia cast doubts about the ability of world oil producers to agree to an output freeze at their meeting in Qatar later this month.

Evan Lucas, market strategist at IG, said in a morning note that "oil is clearly repricing on the idea that 'no deal' will be inked, showing that OPEC is just a cartel by name and not by action."

In the currency market, the dollar index, which measures the US dollar against a basket of currencies, remained at the 94 level, trading at 94.59 as of 8:11 a.m.

The Japanese yen maintained flirted with falling below the 111 level against the dollar, with the dollar/yen pair at 110.97 early morning local time.

Major Japanese exporters were lower, with Toyota off 1.35 per cent, Nissan down 1.84 per cent and Honda losing 1.31 per cent. A stronger yen is a negative for exporters as it reduces their overseas profits when converted into local currency.

Kathy Lien, managing director of FX strategy at BK Asset Management, said in a note overnight that the dollar/yen pair is nearing "intervention territory."

"With the high level of long yen short dollar positions, this is prime time for the Bank of Japan to intervene," she said. "However Japanese policymakers have not confirmed any intervention thus far even though dollar/yen experienced unusual spikes every time it dipped below 111 over the past two months."

She added that Japan's Ministry of Finance, which makes the call on intervention, could be waiting for fiscal stimulus.

The Australian dollar retreated from $0.76 to $0.7587 Tuesday morning, ahead of the Reserve Bank of Australia's (RBA) monetary policy decision due later in the day.

While most analysts do not expect a rate cut from the RBA today, Lien added that there's uncertainty around their comfort with recent moves in the Aussie.

"In the past, the RBA has said they prefer to see Aussie/Dollar trading closer to 65 cents and has described it as overvalued near current levels, but more recently we haven't heard any specific concerns," she said.

In Australia's stock market, shares of Nine Entertainment were down 22.7 per cent as of 8:28 a.m. HK/SIN time, after the company provided a fiscal third-quarter trading update indicating Television revenue was down 11 per cent on-year. The company's fiscal full year results will be released on Aug. 25, 2016.

Major US indexes closed down overnight, with the Dow Jones industrial average down 0.31 per cent, the S&P 500 lower by 0.32 per cent and the Nasdaq composite off by 0.46 per cent.

On the data front, Australia's trade data are due, while interest rate decision from the Reserve Bank of India (RBI) is also on tap.

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