Asian Indexes Mixed; Energy Shares Drop on Crude Oil Weakness

The major Asia Pacific stock indexes are trading mixed with the majority trading lower. Investors are reacting to volatility in the crude oil market while awaiting the Fed’s latest decisions on interest rates and monetary policy, set to be released late Wednesday. On Tuesday, the major U.S. stock indexes finished higher in a lackluster trade.

At 05:50 GMT, Japan’s Nikkei 225 Index is trading 21967.56, down 33.76 or -0.15%. Hong Kong’s Hang Seng Index is at 26735.15, down 37.09 or -0.14% and South Korea’s KOSPI Index is trading 2071.71, up 9.38 or +0.45%.

In China, the Shanghai Index is at 2989.39, up 11.27 or +0.38% and Australia’s S&P/ASX 200 Index is 6677.70, down 17.60 or -0.26%.

Crude Oil Volatility Whipsaws Energy Stocks

U.S. oil company shares declined on Tuesday after posting solid gains the previous session following a steep drop in crude oil prices. The weak price action then spread to the Asia-Pacific markets. The catalyst behind the crude oil sell-off was the news that Saudi Arabia oil supply could return to normal sooner than previously expected.

Crude oil prices plunged on Tuesday after the Saudi energy minister said the kingdom’s oil supply will soon be back online. Energy minister Prince Abdulaziz bin Salman said in a press conference Tuesday that oil production capabilities were fully restored and that oil output will be back to pre-attack levels by the end of September.

The drop in crude oil prices spread weakness throughout the Asia Pacific region on Wednesday. Japan’s Inpex declined 5.13% and South Korea’s S-Oil lost 1.19%. Hong Kong-listed shares of Petrochina and CNOOC slipped 2.09% and 1.71%, respectively. In Australia, Santos lost 1.4% and Woodside Petroleum declined 2.82% while Beach Energy jumped 3.37%.

Share and Economic News Before Fed Decisions

Hong Kong

Anheuser-Busch InBev began taking orders in its second attempt to spin off its Asian business in Hong Kong on Wednesday, aiming to raise up to $6.6 billion in what could be the world’s second largest IPO this year.

If completed, Budweiser APAC’s IPO would provide a boost for Hong Kong after China’s Alibaba Group Holding Ltd last month delayed a listing worth up to $15 billion amid the unrest in the former British colony.

“You could say that the conditions are more challenging, but when we listen to potential investors we believe that there is solid excitement about this business and its IPO,” said Jan Craps, CEO of Budweiser APAC.

Japan

Trade Balance data showed that Japan’s exports fell 8.2% year-on-year in August, less than expectations of a 10.9% decrease by economists in a Reuters poll.

South Korea

South Korea’s plans to drop Japan from a list of countries receiving fast-track approvals in trade took effect Wednesday, a reaction to a similar move by Tokyo to downgrade Seoul’s trade status amid a tense diplomatic dispute.

South Korea’s trade ministry said Japan’s removal from a 20-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes.

Seoul has accused Tokyo of weaponizing trade to retaliate against South Korean court rulings calling for Japanese companies to offer reparations to South Koreans forced into labor during World War II.