Asian trading on the first day of 2019 reflected just how skittish traders are about the state of the current global economy. Oil prices opened lower, prompted by fears of a global supply glut and concerns that a global economic slowdown will decrease demand. Gold prices were higher, not surprisingly, as traders flocked to the safe-haven commodity. Asian markets were also swimming in a sea of red on Wednesday afternoon.
On Tuesday, President Xi Jinping on China sent a message to US President Donald Trump to mark 40 years since the establishment of open diplomatic relations between the countries. In his note, he urged cooperation between the US and China, and lauded the historic progress made between the two countries in the past 40 years. Trump replied that he will continue to prioritize a constructive relationship between the countries. Still, despite this diplomatic dance, little progress has been made in thawing the trade tensions between the countries, and traders have taken note.
Oil prices were down more than 1 percent in the mid-afternoon in Asia. US WTI futures were down 1.08 percent to $44.92 per barrel, while Brent crude futures were 1.26 percent lower, to $53.12 per barrel as of 2:06 p.m. HK/SIN. The drop comes following reports that factory activity in China, the world’s biggest oil importer, contracted in December. Oil prices ended lower in 2018 for the first time in 3 years. Brent was down nearly 20 percent for the year, while US WTI futures lost nearly 25 percent.
In the Asian stock markets, all major indexes were down in the afternoon, with Hong Kong’s Hang Seng Index the biggest loser, down 2.74 percent. South Korea’s Kospi was down 1.70 percent, Australia’s ASX 200 was down 1.57 percent, and the Shanghai Composite was down 1.29 percent. Japan’s Nikkei 225 eased 0.31 percent.