Asian Stocks Extend Week's Drop Amid Oil Retreat, China Outlook

  • Shanghai equities decline for first time in seven days
  • Japan's Topix slips for third session amid yen strength

Asian stocks dropped, extending losses for the week, as oil retreated after worsening economic data from China renewed concern over the outlook for global growth.

The MSCI Asia Pacific Index slipped 0.5 percent to 124.93 as of 5:01 p.m. in Tokyo. After a three-week rally that restored almost $5 trillion to the value of global equities, a sense of uncertainty seems to be returning to markets in the wake of data reinforcing Japan’s economic woes and a sustained drop-off in trade for China. That concern may raise the stakes as investors await a monetary policy review from the European Central Bank on Thursday, with meetings of the Bank of Japan and Federal Reserve due the following week.

“There’s still a lot of underlying concerns and risks that haven’t gone away,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “We’re quite concerned about the weakening economic trends in China. We don’t see the big rebound that we’ve seen as sustainable. We got a little bit oversold a few weeks back and now we’re a little bit overbought.”

China’s Shanghai Composite Index slipped 1.3 percent, ending a six-day rally that’s been driven by suspected state-backed fund buying. The securities regulator has asked listed companies, mutual funds and brokerages to stabilize the market during ongoing annual policy meetings, two people with direct knowledge of the situation said Friday. The government support comes as plunging exports adds to evidence of a deepening economic slowdown.

China Growth

China’s tumbling stock market is set to join the trade slump and sluggish factory conditions as a brake on economic growth this quarter. A 19 percent slump in the Shanghai Composite so far this year will reduce first-quarter gross domestic product growth by between 0.1 percentage point and 0.3 percentage point, according to the majority of economists surveyed by Bloomberg News this month.

The Hang Seng China Enterprises Index dropped 0.8 percent, while Hong Kong’s Hang Seng Index lost 0.1 percent. Japan’s Topix index fell 1.1 percent as the yen maintained two days of gains, damping the outlook for export earnings. The benchmark has lost 3.1 percent this week, after climbing 15 percent over the past three weeks.

Taiwan’s Taiex index slid 0.4 percent, Singapore’s Straits Times Index climbed 0.6 percent. Australia’s S&P/ASX 200 Index advanced 1 percent and New Zealand’s S&P/NZX 50 Index added 0.2 percent. South Korea’s Kospi index gained 0.4 percent.

Inpex Corp. dropped 2.6 percent in Tokyo, pacing losses among energy producers as crude oil futures retreated. Japanese shippers declined, with Mitsui O.S.K. Lines Ltd. and Nippon Yusen KK sliding more than 5 percent after Mitsubishi UFJ Morgan Stanley predicted a sharp fall in their profits. Zijin Mining Group Co., China’s biggest gold producer, tumbled 6.4 percent in Hong Kong as the bullion’s price decreased.

E-mini futures on the Standard & Poor’s 500 Index rose 0.1 percent. The underlying U.S. equity benchmark index fell 1.1 percent Tuesday from its highest level since Jan. 5, led lower by raw-materials producers and energy stocks. U.S. crude dropped 3.7 percent on Tuesday, retreating from a two-month high.

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