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- Asian stocks dipped on Monday amid a lack of immediate directional cues in light year-end trade, although Japanese shares managed to rise following a rebound in crude oil prices from multiple-year lows. Investors across asset markets were without some of the usual leads as most global markets were closed on Friday for Christmas. The British markets will remain closed on Monday, while those in Germany and France will reopen. Stocks affiliated with Samsung Group fell after the South Korean conglomerate said on Sunday its battery-making arm Samsung SDI will sell shares in sister firm Samsung C&T Corp to comply with regulatory requirements.
- Still, the warmer-than-usual winter affecting many parts of the world, attributed to the El Nino weather pattern, meant potentially less crude demand for heating purposes. Analysts also pondered the wider economic impact of the weather pattern. Late last week, a weaker-than-expected U.S. index on employment cost also weighed on the greenback. The currency market will be keeping an eye on coming U.S. data to gauge if the world’s largest economy is strong enough to withstand further rate hikes in 2016.
- The dollar moved away from a two-month low against the yen in Asian trade on Monday, following downbeat Japanese economic data in holiday-thinned trading. Some markets, including Australia and many in Europe, will remain closed on Monday after the Christmas holiday on Friday. Japanese data released earlier on Monday was yen-bearish, although the market’s reaction was muted. Japan’s industrial output fell 1.0 percent in November from the previous month, more than the median market forecast for a 0.6 percent drop, suggesting that sluggish emerging market demand continues to cloud the economic outlook. Separate data showed Japanese retail sales fell 1.0 percent in November from a year earlier, more than a median market forecast for a 0.6 percent fall. Those figures came on the heels of mixed data on Friday, that rekindled speculation that the Bank of Japan might eventually opt to take additional stimulus steps to meet its goal of sustainable 2 percent inflation.
- Oil prices fell on Monday after the long Christmas weekend, with U.S. crudes defending a newly gained premium over internationally traded Brent contracts in quiet trading ahead of the end of the year. Trading volumes were down for both contracts in the post-holiday period. Only about 5,000 WTI contracts have changed hands so far during this trading session on Monday versus 8,953 contracts at this point in the trading session on December 7. The U.S. market tightened slightly in December following reduced drilling activity, withdrawals from near record crude stockpiles and the prospect of crude exports following a 40-year export ban. The brokerage added that it expected “a quiet week ahead” with the biggest expected news for energy markets likely coming from U.S. inventory data to be published on Wednesday and Thursday. While the U.S. slightly tightened, international markets remain over supplied as producers like Russia and the Organization of the Petroleum Exporting Countries (OPEC) produce between half a million and 2 million barrels of crude every day in excess of demand. At the same time, developed and emerging economies especially in Asia are slowing. In Japan’s refining sector, top oil refiner JX Nippon Oil & Energy Corp said on Monday it would trim its domestic crude refining plans in January from a year earlier, due to unspecified problems with its refining operations and scheduled maintenance. The company, the core business unit of JX Holdings Inc, said it would process 1.11 million barrels per day (5.49 million kilolitres) of crude oil in January for domestic consumption, down 2 percent from a year earlier. Japan’s domestic demand has been easing due to a shrinking population, while a decline in kerosene demand accelerated this month due to warmer temperatures, a spokesman said. In 2014, Japan was the third-largest global oil consumer, closely followed by India, according to the BP Statistical Review of World Energy.