Chinese Shares Tumble With Oil While Early Rally in Japan Fades

Chinese stocks fell the most in almost two months as crude oil retreated, while Japanese shares pared gains in afternoon trading as Mitsubishi Motors Corp. plunged the most since 2004.

The MSCI Asia Pacific Index was little changed at 132.65 as of 4:26 p.m. in Hong Kong. The Shanghai Composite Index sank 2.3 percent, pushing a gauge of volatility up from its lowest level this year as turnover surged. Japan’s Topix index rose 0.2 percent, paring gains of as much as 1.3 percent. West Texas Intermediate crude fell 2.4 percent after Kuwait workers said they would end a strike that disrupted output in OPEC’s fourth-largest producer for three days.

Global stocks rallied this month as data pointed to a stabilization in Chinese growth, U.S. companies reported better-than-expected earnings and the Federal Reserve signaled a slower pace of interest-rate hikes. The pullback in Shanghai shares, which jumped in March by the most in 11 months, comes as the People’s Bank of China signals a reduced appetite for monetary easing in the world’s second-largest economy.

“We will probably see the PBOC take a wait-and-see approach and assess the macro-economic data coming through” before adding to stimulus measures, said Niv Dagan, executive director at Peak Asset Management LLC in Melbourne. “The fundamentals for oil are still bearish.”

Regional Gauges

The Shanghai Composite dropped as much as 4.5 percent as traders struggled to explain the reason behind the sudden selloff, which isn’t an unusual occurrence in a market dominated by individual investors. Interest in mainland equities has been fading this month after March’s 12 percent surge amid concern that improving economic data will prevent the government from adding stimulus. 

Hong Kong’s Hang Seng Index slipped 0.9 percent, while the Hang Seng China Enterprises Index of mainland stocks traded in the city dropped 1.2 percent. South Korea’s Kospi index lost 0.3 percent. Taiwan’s Taiex index fell 1.4 percent. Singapore’s Straits Times Index was little changed and Australia’s S&P/ASX 200 Index gained 0.5 percent. New Zealand’s S&P/NZX 50 Index added 0.4 percent.

China Gas Holdings Ltd. slumped 12 percent in Hong Kong, pacing losses among gas distributors after Mizuho Securities Co. said the mainland may lower prices this month or in May. Mitsubishi Motors Corp. tumbled 15 percent in Tokyo, the most since July 2004, after the Japanese government said the automaker improperly handled fuel economy data involving its minicars. Kubota Corp. jumped 4.6 percent after the Nikkei newspaper said the machinery maker will look to halve inventory in an effort to boost productivity.

E-mini futures on the Standard & Poor’s 500 Index fell 0.3 percent. The U.S. equity benchmark index rose 0.3 percent to 2,100.80 on Tuesday as commodity producers rallied in a seesaw session amid mixed results in corporate earnings.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE