SINGAPORE and TOKYO: Asian stocks slumped to three-and-a-half-year lows yesterday as brief gains earlier in the session gave way to renewed pressure on crude oil prices and disappointing Chinese data, ratcheting up investor concerns about the global economy.
MSCI’s broadest index of Asia-Pacific shares outside Japan declined 0.7 percent to the lowest level since June 2012 and was on track for a loss of 3.2 percent for the week.
Japan’s Nikkei also reversed earlier advances to close down 0.5 percent, extending losses for the week to 3.1 percent. Sydney lost 0.3 percent, Seoul shed 1.1 percent, Singapore slipped 0.5 percent and Hong Kong was down 1.5 percent.
Europe’s stock markets extended their heavy losses yesterday as investors reacted to new 12-year lows for crude oil prices, auto sector woes and China’s struggling economy.
Oil prices rebounded on Thursday, with international benchmark Brent futures rising 2.4 percent to US$31.03 a barrel, recovering from a 12-year low of US$29.73 hit earlier in the day, but that rally proved to be short-lived.
“Market sentiment was cautious to begin with, as overnight gains in US equities were complicated by losses by European indices,” said Bernard Aw, market strategist at IG in Singapore. “Furthermore, oil prices were under pressure once again, constraining any relief rally in energy and material stocks.”
Brent crude opened weaker yesterday and lost 1.4 percent to US$30.38, heading for a 9.4 percent loss for the week.
US crude oil fared even worse, slumping 2.6 percent to US$30.39 and set for a weekly decline of 8.5 percent, as the prospect of additional Iranian supply looms over the market. It had posted the first significant gains for this year in the previous session.
Stocks in China also returned to negative territory after a brief rebound in late trading on Thursday.
The bounce — which saw the Shanghai Composite index reverse an earlier fall to a four-and-a-half-month low to end 2 percent higher — raised suspicions among dealers that a “National Team” of investors, who participated in a rescue when markets plunged in August last year, had been behind the move.
Shares in China extended earlier losses yesterday after data showed new yuan loans last month were well below the previous month’s lending and broad M2 money supply growth also slowed, with both missing expectations.
The Shanghai Composite lost 3.4 percent, while the CSI300 tumbled 3.1 percent. That put the former on track for a 8.8 percent loss for the week and latter for a decline of 7 percent.
In the currency market, the yen advanced after earlier losses on a resumption of demand for the safe-haven currency.
The US dollar slipped 0.3 percent to ￥117.72, but remained solidly above a four-and-a-half-month low of ￥116.70 hit on Monday.
The euro advanced 0.2 percent, fetching US$1.0883. That pushed the US dollar index down 0.1 percent to 98.990.
The European Central Bank said it saw scope for further cuts in its deposit rate in minutes of its meeting last month, but many policymakers appeared skeptical about the need for further action in the near term.
Commodity-linked currencies also gave up earlier gains, with the Australian dollar slipping 0.7 percent to US$0.6937, up from Thursday’s four-month low of US$0.6910.
