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Asia sinks as oil slides back below $30, yen makes inroads

News Date: 3/2/2016 01:14:50
Asian shares plunged on Wednesday following a similarly dismal showing by Wall Street after oil prices tanked anew below the crucial psychological level of $30. The tumble comes about as investors lose hope of a strong global growth, especially in China and developing countries, while a spread of the Zika virus in the Americas dented travel shares deeply.

Japan's Nikkei sank 3.20% to 17,178, leading the decliners in Asia and wiping most of its post-BoJ gains, after data showed a new slip in consumer confidence to a three-month low at 42.5. A private survey in China showed a surprise uptick in services PMI to 52.4, but traders brushed off the results however, with the Shanghai's index dropping 1.60%. Australian shares eased 2.30% to a two-week low, while South Korea's KOSPI slid 0.90%.

Wall Street closed sharply down, with energy shares and transportation companies taking the most heat, following the announcement of another case of Zika virus in the United States, from a person coming from Latin America and infecting his sexual partner. The virus causes severe birth defections and is expected to slow down travel to the Americans, hitting airliners and hoteliers profits and others.

The Dow Jones Industrial Average closed off nearly 300 points, or 1.80% at 16,153. NASDAQ Composite was the biggest decliner, tanking 2.24%, or 103 points to 4,516. Standard and Poor's 500 index lost 36 points, or 1.87% at 1,903.

Safe havens benefited from the global turmoil, with the yen advancing a third of a point against the dollar to 119.25, the third consecutive daily gain. The Japanese currency also rose 0.35% against sterling to 172.26.

U.S. crude prices dropped below $30 again as hopes fade for a deal between major global producers to cut production, while Iran began pumping more oil, exacerbating the supply excess and pressuring prices further. The U.S. crude futures traded at $29.70 a dollar, down half a percent for the day, while Brent futures gave up 20 cents, or 0.61% to trade at $32.48 a barrel.

Investors wait for an array of data today, with Britain's services PMI expected at 55.4 in January, barely down from December's 55.5, but would still be far from 50.0 which separates growth from shrinkage.

From the U.S., crude oil stocks are expected to have risen yet again by 3.7M last week, adding to the previous week's 8.4M increase, which would be negative for prices.

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