• Oil prices sink further, dollar hit by wage data

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    HONG KONG: Oil prices tumbled again on Monday, while most Asian stock markets also retreated after a sell-off in New York at the end of last week that came in reaction to data showing weak US wage growth.

    The news on wages, which overshadowed another forecast-beating rise in jobs creation, pushed the dollar down against the euro and yen as it complicates the Federal Reserve’s plans to hike interest rates.

    Sydney fell 0.78 percent, or 42.9 points, to close at 5,422.7 and Seoul closed 0.19 percent lower, or 3.75 points, at 1,920.95, while Shanghai—which has surged more than 50 percent over the past year—slipped 1.78 percent in late trade.
    However, Hong Kong edged up 0.24 percent in the afternoon.

    Tokyo was closed for a public holiday.

    Weak demand and a supply glut sent crude to new five-and-a-half-year lows, with analysts tipping further losses this week.

    The US benchmark, West Texas Intermediate for February delivery, lost $1.00 to $47.36 a barrel, while Brent was $1.06 to $49.05.

    Singapore’s United Overseas Bank said in a commentary: “Oil prices continued to tumble and headed for a seventh straight weekly loss as key producers show no sign of cutting output in the face of a supply glut.”

    Crude prices have lost more than half their value since the middle of last year, with weakness in key markets China and the eurozone adding to the supply and demand crisis.

    Wall Street provided a negative lead for stock markets after figures showed US wages grew 1.7 percent year-on-year in December, barely keeping up with inflation and indicating consumer spending power remained low.

    The Dow slipped 0.95 percent, the S&P 500 fell 0.84 percent and the Nasdaq lost 0.68 percent.

    Euro up against dollar
    Traders latched on to the data, ignoring the fact that unem-ployment fell to 5.6 percent, the lowest level in six and a half years, while 252,000 new posts were created in December to cap the best year for job creation since 1999.

    “Despite the robust US jobs data, markets chose to focus on the weak wages growth and the likelihood that it will keep the Fed Reserve ‘patient’ about any rate hike,” United Overseas Bank said.

    Economists took the report as allowing the Fed to hold off hiking interest rates too soon, denting speculation of an increase in April and making the dollar less attractive to investors.

    “This tug of war between deflation and expectations of the first rate hike in many years by the US Fed is likely to result in intense volatility,” Nader Naeimi at AMP Capital Investors in Sydney, told Bloomberg TV.

    In Asian trade it bought 118.21 yen compared with 118.46 yen on Friday in New York.

    The euro fetched $1.1860 against $1.1842, while it was also at 140.20 yen compared with 140.29 yen.

    Gold cost $1,228.96 an ounce, compared with $1,211.42 on Friday.

    AFP

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