Asian share rally runs out of steam as oil falls again
AFP
AFP, HONG KONG: Asias share rally stalled yesterday with markets battling a fresh fall in the price of oil and renewed fears over the Chinese economy.
Japanese stocks fell as a stronger yen hit exporters while Shanghai also dropped, after private indicators showed confidence in the manufacturing and service sectors falling to new lows. The impact of the gathering Chinese slowdown and the collapse in commodity prices helped push global mining giant BHP Billiton, which counts China as a key customer, to a huge six-month net loss on Tuesday.
Chinas slowdown is yet to fully play out and markets are watching what policies will be rolled out to address that, said Nescyn Presinede, trader at Manila-based Rizal Commercial Banking Corporation, according to Bloomberg News. The environment remains volatile with investors focused on oil prices.
US crude for April fell 2.58 per cent while Brent for April was down 2.48 per cent, as traders remained doubtful that talks on an output freeze among key crude producers would bear fruit.
US inventories probably expanded further from their highest levels in more than eight decades, according to a Bloomberg survey before US data on Wednesday.
The increase in stockpiles will mean oil will remain lower for longer, Evan Lucas, a market strategist at IG Ltd in Melbourne, told Bloomberg.
The supply side is a big hurdle. We expect prices to edge up ever so slightly in the second quarter, itll inch toward $35 and average around that level.
Wall Street equities had enjoyed healthy gains Monday, closing sharply higher after US oil prices surged more than six per cent.
But Tokyo lost 0.37 per cent Tuesday after early gains fizzled out as crude prices reversed course and the yen rose, which is a negative for exporters profitability, and tends to hit demand for their shares.
Auto parts giant Takata dived on news it could be hit with tens of millions more recalls linked to a deadly airbag scandal.
Analysts warned that the Bank of Japan may be running out of policy tools after it announced a negative interest rate policy last montha move widely seen as a desperate effort to kick-start growth. More easing measures would tend to weaken the yen.
Its beginning to feel like the BoJ is completely stuck, Tetsuo Seshimo, a portfolio manager at Saison Asset Management, told Bloomberg.
Its difficult to imagine any scenarios where the BoJ can take action.
Chinese stocks lost 0.81 per cent and the yuan declined after the Peoples Bank of China lowered its daily reference rate by the most in six weeks.
The losses came as the Minxin manufacturing index fell to 37.5 in February from 41.8 in January, while the non-manufacturing gauge fell to 37.5 from 43, according to the China Academy of New Supply-side Economics, quoted by Bloomberg. Numbers below 50 indicate contraction.
Investors also took profits after the market rallied a day earlier on the announcement of a new chief for the securities market regulator, dealers said.
Hong Kong closed down 0.25 per cent, while Asia-focused bank Standard Chartered swung to a $2.36 billion net loss in 2015 against a backdrop of global market volatility, restructuring costs and bad loans.
In Australia, global mining giant BHP Billiton Tuesday posted a first-half net loss of US$5.67 billion and slashed dividends as plunging commodity prices hammered the bottom line.
The result in the six months to December 31, dogged by impairments, compared to a US$4.26 billion profit in the previous corresponding period, with revenue dropping 37 per cent to US$15.71 billion.
But BHPs share price, which has plunged over the past 12 months, ended 2.62 per cent higher at Aus$17.63 as analysts suggested the results were not unexpected.
Yet the dramatic fall in the price of oil since 2014 helped Australian carrier Qantas post a huge rise in first-half net profit, which soared 234 per cent.
Overall, Sydney closed 0.43 per cent down while South Korean shares fell 0.11 per cent on Tuesday.
Europes main stock markets fell at the start of trading on Tuesday, with London dropping 0.6 per cent, Frankfurt sliding 0.7 per cent and Paris shedding 0.6 per cent.
