- Energy shares lead declines as oil slumps below $28 a barrel
- China stocks in Hong Kong slip to lowest level since 2009
Asian stocks dropped the most in three months and Japanese shares plunged into a bear market as tumbling oil prices fed concerns over the global economic outlook.
The MSCI Asia Pacific Index sank 2.8 percent to 116.51 as of 4:01 p.m. in Hong Kong, heading for its biggest decline since September. Energy shares led losses across the region as oil extended its decline from the lowest close in more than 12 years before weekly U.S. government data forecast to show crude stockpiles expanded, exacerbating a global glut.
The 14-day relative strength index for the regional stock gauge, a measure of momentum, traded below 30, a level some traders take as an indication shares will rise.
“We’ll continue to see a tug of war between nervous sentiment and technical indicators showing that falls have gone too far," said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities Inc. in Tokyo. “At the root of the selling we’ve seen this year has been the imbalance of oil supply and demand, so until the oil price moves calm down, the stock market will struggle."
Concern over China’s ability to manage a transition to more sustainable growth has driven down global equities in 2016. The International Monetary Fund cut its world growth outlook, highlighting weaker prospects for commodity-producing nations and risks tied to the Federal Reserve’s exit from ultra-low interest rates. Oil markets could “drown in oversupply,” sending prices even lower as demand growth slows and Iran boosts exports, according to the International Energy Agency.
Japan’s Topix index sank 3.7 percent to 1,338.97 at the close in Tokyo, taking its loss since a high on Aug. 10 to 21 percent. The Nikkei 225 Stock Average fell 3.7 percent to 16,416.19, also down 21 percent from its recent peak on June 24. Bank of Japan officials are increasingly expressing disappointment at subdued annual wage talks, said people familiar with the discussions, making next week’s monetary-policy decision a closer call.
The Nikkei 225 last entered a bear market in June 2013, after plunging 20 percent in less than a month. The gauge soon rebounded, rallying 31 percent from its low on June 13, 2013, through the end of that year.
Chinese stocks in Hong Kong tumbled to the lowest level since the depths of the global financial crisis as a slide in the city’s dollar spurred concerns over capital outflows. The Hang Seng China Enterprises Index plunged as much as 5.5 percent before paring losses to 4.3 percent at the close in Hong Kong. The Shanghai Composite Index lost 1 percent. The benchmark Hang Seng Index dropped 3.8 percent to the lowest since July 2012.
Policy makers in China and Hong Kong are fighting to prevent a vicious cycle of capital outflows and a weakening currency with the resulting financial-market volatility heightening concern that the mainland’s deepest economic slowdown since 1990 will worsen.
Australia’s S&P/ASX 200 Index slipped 1.3 percent, taking its loss from a high on April 27 to 19 percent, close to a 20 percent drop that would meet the definition of a bear market.
BHP Billiton Ltd. fell 3.5 percent after the world’s biggest mining company trimmed its full-year iron ore forecast. New Zealand’s benchmark gauge lost 0.2 percent. Singapore’s Straits Times Index tumbled 2.6 percent to a 2011 low. The Kospi index plunged 2.3 percent in Seoul. Taiwan’s Taiex index slid 2 percent.
Inpex Corp. slumped 6.2 percent in Tokyo, pacing losses among energy producers. Japanese exporters declined as the yen strengthened, with Sony Corp. plunging 8 percent and Toyota Motor Corp. falling 3.4 percent. Galaxy Entertainment Group Ltd. tumbled 7.6 percent in Hong Kong, leading declines among Macau casinos after CLSA Ltd. said it expects gaming revenue from the former Portuguese enclave will drop at least 20 percent this month.
E-mini futures on the Standard & Poor’s 500 Index dropped 1.7 percent. The U.S. gauge closed a volatile session little changed, near the lowest level since August, as gains in consumer shares offset declines in commodity companies.