Asia markets dropped Monday morning, as oil tumbled after a summit of top oil producers in Doha failed to reach an agreement to freeze production and Japan shares took a hit from large earthquakes.
In Singapore, The Straits Times Index was down by one per cent, or 29.77 points, at 2,894.17, The Business Times reported.
Japan's Nikkei 225 led the sell-off in Asian markets, with the benchmark index down 2.76 per cent. Across the Korean Strait, the Kospi fell 0.52 per cent. In Australia, the ASX 200 was down 0.38 per cent.
Angus Nicholson, a market analyst at IG, cautioned in his morning note that "given the strong correlation between the oil prices and equities, Asian markets are not looking like they will have a good start to the week."
Oil prices tumbled more than 5 per cent in Asian hours, with US crude futures down 5.65 per cent at $38.08, while global benchmark Brent fell 5.13 per cent at $40.89 as of 8:36 a.m. HK/SIN time.
The commodity sold off after the meeting between the world's largest oil producing countries in Doha failed to produce a deal to freeze output and boost sagging crude prices.
Analysts said the Doha outcome was largely to be expected, with some pointing to the geopolitical situation in the region.
In his morning note, Nicholson said, "With Saudi Arabia fighting proxy wars with Iran in Yemen and Syria/Iraq, it is understandable that they had little inclination to freeze their own production and make way for newly sanctions-free Iran to increase their market share."
Energy stocks in the region were sharply lower, with Santos selling off 5.88 per cent, Oil Search off 4.62 per cent and Inpex down 6.34 per cent.
In Japan, the yen climbed and stocks tumbled after a powerful second earthquake struck southern Japan on Saturday. Reuters reported the 7.3 magnitude earthquake caused widespread damage, with reports of fires, power outages, collapsed bridges and gaping holes in the earth. Manufacturers including Honda, Renesas Electronics and Sony halted production after the tremors, but no major damage was reported, according to Reuters.
The yen rose to the 108 level against the dollar; late last week, the yen traded at the 109 level against the dollar. As of 8:39 a.m. HK/SIN time, the dollar/yen pair was at 108.07, after briefly dipping to 107.88 earlier.
Japanese exporters sold off sharply, with shares of auto players Toyota, Nissan and Honda down between 4.76 and 5.52 per cent. A stronger yen is usually a negative for exporters as it affects their overseas profit when converted to local currency.
Shares of Sony were down 5.83 per cent.
Elsewhere, the Australian dollar retreated to $0.7657 after finishing the previous session at $0.7719 on the back of slightly improved Chinese economic data released Friday. China is a key export market for Australia and the Aussie tends to move in tandem to the mainland economy.
US stocks closed lower Friday, with the Dow Jones industrial average down 0.16 per cent, the S&P 500 off by 0.1 per cent and the Nasdaq composite lower by 0.16 per cent.