Nikkei Futures Drop 1,890 Points as Oil and Tech Debt Spook Asia

Asian stock futures fell hard in night trading after Wall Street closed lower on Friday, October 16. Surging oil prices unsettled investors ahead of the weekend, and worries about heavy debt at technology companies weighed on sentiment, Minkabu, HKET and FTV News reported.

Nikkei 225 futures for December delivery on the Osaka Exchange ended the night session at 63,630. That was down 1,890 points from the previous settlement, and 1,694 points below the Nikkei cash close of 65,324.29 on Friday. Volume reached 13,825 contracts. TOPIX futures stood at 4,027.5, down 54 points.

Taiwan and Hong Kong futures also slide

TAIEX futures fell 1,144 points, or 2.42 percent, to 46,140 in the night session. TSMC futures closed at 2,384, down 47 points. Hang Seng Index futures closed the night session at 24,112, down 47 points, with 12,335 contracts traded, HKEX data showed.

Chinese shares listed in New York also fell. The Nasdaq Golden Dragon China Index dropped 1.3 percent to 5,695. Alibaba shares in the United States were equal to HK$107.04, down 1.61 percent from the Hong Kong close. Tencent was equal to HK$414.01, down 0.91 percent, and HSBC was equal to HK$148.45, down 0.84 percent.

A strong Friday cash session, then a weak US close

The futures drop came after a strong Friday cash session in Asia. The Nikkei 225 rose 1.39 percent to 65,324.29. South Korea's KOSPI rose 2.05 percent to 5,668.05. The Hang Seng rose 0.52 percent to 24,186.83, and Australia's S and P/ASX 200 rose 1.00 percent to 8,806.70. India's Sensex added 0.42 percent to 74,624.77.

Wall Street then closed lower across the board on Friday. The Nasdaq Composite fell 2.14 percent to 26,140.03. The S and P 500 fell 1.09 percent to 7,659.44, and the Dow Jones Industrial Average fell 0.34 percent to 52,002.41.

Oil added to the pressure. Brent crude topped 110 dollars a barrel on Saturday, October 17, as supply fears grew after attacks on energy sites and shipping in West Asia, Nation Press reported.

Why it matters

Futures set the tone for Monday's open in Asia. A drop of this size in the Nikkei and in Taiwan points to a weak start, with chip and tech shares under the most pressure. Oil above 110 dollars also raises fuel and import costs for Asian economies that buy most of their energy from abroad.

What happens next

Traders will watch Sunday night futures and any weekend news on oil supply and tech company debt. If oil stays above 110 dollars, central banks in Asia face a harder choice on interest rates, because energy prices feed straight into inflation.