Asia Stocks Wary as China Concerns Remain, Oil at New 12-Year Low

Asian stocks are shaky on economic worries in China; Nikkei hits 3-month low after market holiday.

• Asian stocks hover near four-year lows on China economy worries
  
• Crude oil prices approached a 20 percent drop in less than two weeks.
  
• BRIC and other EMs have bled the most so far this year with losses of 7.2 and 6.8 percent.
  
• The dollar was firmer against other major currencies.
  

Asian stocks held near four-year lows and crude oil prices approached a 20 percent drop in less than two weeks as investors worried over the extent of China’s economic slowdown and its impact on emerging markets.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.4 percent higher but still stood near a four-year low touched on Monday, and was still down more than 8 percent since the start of 2016. It fell 12 percent last year.

Investors are still concerned about the extent of China’s slowdown and while we may be in the middle of a consolidation phase, we have yet to see any data indicating a turnaround which is feeding the overall uncertainty.

Ben Pedley, Head of Investment Strategy for Asia, HSBC Private Bank

With investors still licking their wounds from last year’s plunge in global commodity prices and a sharp selloff in Chinese markets, 2016 has brought about more pain for investment portfolios in the form of a deepening slowdown in the global economy and volatile Chinese markets.

Japan’s Nikkei fell 1.3 percent after a market holiday on Monday, hitting a three-month low and down over 8 percent so far this year while Chinese stocks swung around in volatile opening trades.

According to MSCI global indexes, BRIC and other emerging market indexes have bled the most so far this year with losses of 7.2 and 6.8 percent each. MSCI’s broadest gauge of world stocks fell to its lowest level since Sept 2013.

On Wall Street, the S&P 500 managed to stabilise on Monday after three straight days of one-percent-plus declines, ending the day up 0.1 percent.

It is a good sign that US shares bought back in late trading to end in positive territory ... Maybe they were helped by the view that the Fed may not be able to raise rates when markets were gripped by fear over China and falling oil prices.

Masahiro Ichikawa, Senior Strategist, Sumitomo Mitsui Asset Management

Commodity prices remained under severe pressure, with oil prices hitting new 12-year lows on concerns about slow demand and oversupply – including US shale oil production and a likely supply increase from Iran with sanctions lifted.

US crude futures fell to a 12-year low of $30.88 per barrel on Monday, and last stood at $31.19, down almost 16 percent so far this year.

Brent futures fell to $31.17 per barrel, also a 12-year low.

The dollar was firmer against other major currencies.

The euro traded at $1.0857, having slipped 0.6 percent on Monday.

The yen, which had been buoyed by safe-haven flows, also stepped back from a 4 1/2-month high touched on Monday at 117.70 yen to the dollar.