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Asian Shares Fall Down Corresponding To Oil Drop, The Lowest Since 2011

By January 19, 2016 at 2:02 am
Traders work on the floor of the New York Stock Exchange at the end of the day on January 15 2016 in New York City (Photo : Spencer Platt/Getty Images)

The oil price drop on Monday pulls down Asian shares lower since 2011.

Iran's freedom from sanctions opted them to contribute as much as 500,000 barrels per day, contributing to the already oversupply market. On Monday, oil price falls further down to $28 a barrel, the lowest since 2003, affecting Asian shares, Times of Oman reported.

According to MSCI's broadest index, the shares of Asia Pacific outside Japan fell down since the lowest price in October 2011, with a last down of 0.5 percent. Japan's Nikkei dove to 2.8 percent, a major downfall of the peak 20 percent in June.

"Iran is now free to sell as much oil as it wants to whomever it likes at whatever price it can get," said program director for Economic Statecraft, Sanctions and Energy Markets at Columbia University's Center on Global Energy Policy, Richard Nephew.

S$P 500 has been 2.2 percent down for four months while Dow Jones Industrial dropped by 2.4 percent. The Nasdaq also fell at 2.7 percent, one of the lowest numbers over the course of one year, according to Nasdaq.

"The fact that US and European shares fell below their August lows, failing to sustain their rebound, is significant," said SMBC Nikko Securities chief fixed income strategist, Chotaro Morita. "We are coming to a stage where we need to consider the risk of recession in the global economy."

The unexpected downfall in retail sales, plus the consistent monthly slowdown in industrial production in December, contributed to the indication that the U.S. economy growth fell sharply during the fourth quarter.

On the same quarter, the Atlanta Federal Reserve's GDPNow forecast model is seen with 0.6 percent growth from 2.0 percent in the third quarter.

Also, China's energy and raw material industry is at its hardest, affecting a slow-down in the economy.

"The biggest focus is oil prices. Oil producing countries have to sell their assets to finance their budget gaps. They are selling shares around the world," said Mitsubishi UFJ Morgan Stanley Securities investment strategist, Norihiro Fujito. 

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