Asian shares dip as Australia hostage crisis, Japan polls weigh

Investing.com - Stocks in Asia weakened Monday, as worries about a terrorist attack in Australia added to pressure from declining oil prices, while investors in Japan shrugged off a decisive election win for Prime Minister Shinzo Abe to focus on weak data.

The Nikkei 225 was down 1.0% at 17193.87, even after a weekend election gave Abe a majority in parliament that would let him push more easily for an aggressive agenda to jump-start an economy now in recession. Analysts said the market was largely expecting the result.

The losses came after a quarterly survey released by the central bank showed that domestic manufacturers are becoming more cautious about the future despite lower oil prices.

The S&P/ASX 200 was down 0.9% at 5173.70, as a suspected terrorist attack was under way. Armed police shut down central Sydney after a suspected gunman and possibly accomplices took several people hostage in a cafe.

Elsewhere, Korea's Kospi was down 0.7% at 1908.70.

Last week, Falling oil prices slammed U.S. stocks on Friday by stoking concerns that assets in general may be overvalued in wake of years of ultra-loose monetary policy, with disappointing U.S. and Chinese data adding to the day's selloff.

At the close of U.S. trading, the Dow Jones Industrial Average index fell 1.79%, the S&P 500 index fell 1.62%, while the Nasdaq Composite index fell 1.16%.

Oil prices have fallen in recent months on concerns that supply far outstrips demand, and a recent OPEC decision to leave output unchanged has exacerbated losses.

Don't expect the supply glut to abate anytime soon, the International Energy Agency said in its December report released earlier Friday, as more oil is still in the global pipeline.

"Barring a disorderly production response, it may well take some time for supply and demand to respond to the price rout," the IEA said in its report.

"When it comes to supply, lower oil prices are already slashing producers' spending, but this is more likely to affect medium- and long-term output than short-term supplies. So long is the lead of oil projects that price swings can take time to work their way through to supply. Projects that have already been funded will for the most part go on."

The IEA also said it had cut its 2015 global oil demand growth forecast by 230,000 barrels per day to 0.9 million bpd, which hammered stocks by stoking concerns headwinds may be cooling the global economy at a time when many assets may be overvalued due to years of low interest rates and loose monetary policies.

Meanwhile in the U.S., mixed data sent investors heading for the exit door.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to a nearly eight-year high of 93.8 this month from 88.8 in November. Analysts had expected the index to rise to 89.7 in December.

However, the U.S. Department of Labor reported that the U.S. producer price index fell 0.2% last month, surpassing expectations for a 0.1% downtick, after rising 0.2% in October.

Core producer price inflation, which excludes food, energy and trade, was flat in November, confounding expectations for a 0.1% rise, after an increase of 0.4% the previous month.

Elsewhere, China reported that its industrial production rose 7.2% in November, missing expectations for an increase of 7.5%, after a 7.7% gain in October, which added to Friday's losses.

On Monday, Switzerland is to publish data on producer price inflation.

In the euro zone, Germany’s Bundesbank is to publish its monthly report.

The U.K. is to release private sector data on industrial order expectations.

Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.