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Japan’s Nikkei Hits 1-Month Low; Oil Producers, Gold Miners Boost Aussie Index

James Hyerczyk

The major Asia Pacific stock indexes are mostly under pressure on Monday with stocks in Japan taking the biggest hit as investors return after a nearly weeklong vacation. Continuing to weigh on prices were heightened geopolitical tensions in the Middle East. After following the bearish theme early in the session, shares in Australia turned slightly higher.

At 06:54 GMT, Japan Nikkei 225 Index is trading 23204.86, down 451.76, down 1.91%. South Korea’s KOSPI Index is trading 2155.07, down 21.39 or -0.98% and Hong Kong’s Hang Seng index is at 28098.75, down 352.75 or -1.24%.

China’s Shanghai Index is trading 3074.66, down 9.12 or -0.30% and Australia’s S&P/ASX 200 is at 6735.70, up 2.20 or +0.03%.

Japan Nikkei 225 Index

Japan’s Nikkei share average fell to a one-month low on Monday as risk aversion gripped the market on the first trading day of 2020 on fears of an impact to global economic growth from a flare up in tensions between the United States and Iran.

U.S. President Donald Trump on Sunday threatened a “major retaliation” against Iran if Tehran were to hit for the killing of one of its top military commanders.

The broader Topix lost 1.75% to 1691.20, falling to its lowest levels since late November. The Tokyo stock market was closed from Tuesday to Friday last week for New Year holidays.

Concerns about a further escalation in the Middle East tension hit shippers and airlines, which fell 4.0% and 2.5%, respectively. However, a spike in oil prices helped oil companies, with the Tokyo Stock Exchange’s oil and coal producer index rising 2.9%.

China Shanghai Index

China stocks started the week higher on Monday, aided by strong gains for the country’s oil producers as oil prices extended gains on escalating Middle East tensions. However, investors finally succumbed to selling pressure by the mid-session.

In economic news, China’s services sector expanded at a slower pace in December following a strong rebound in the previous month, with business confidence falling to the second lowest on record despite a pick-up in new orders, a private survey showed on Monday.

The Caixin Services PMI came in at 52.5, below the 53.2 estimate and 53.5 previous read.

Aussie Shares Inch Higher

Australian shares recouped early losses to post a marginal gain on Monday as escalating tensions in the Middle East buoyed shares of oil producers and gold miners.

With global risk appetite declining, anxious investors increasingly turned to safer avenues such as bullion. Shares of energy firms also climbed as crude oil prices rallied on fears of supply disruptions in the Middle East.

This article was originally posted on FX Empire