Asian Stocks Resume 2016 Slump as Japanese Shares Lead Declines

  • Topix index erases most of Wednesday's rebound, falling 2.5%
  • Equities pared losses in afternoon trading as China gained

Japanese Shares Drop Most Since September

Asian stocks resumed their 2016 rout, with the regional benchmark index falling for the eighth time in nine days, as Japanese shares tumbled following a renewed selloff in U.S. equities.

The MSCI Asia Pacific Index sank 1.7 percent to 120.67 as of 8 p.m. in Tokyo, as all 10 industry groups retreated. The gauge trimmed a retreat of as much as 2.6 percent in afternoon trading as the Shanghai Composite Index reversed losses. Japan’s Topix index pared a drop of as much as 4.1 percent to close 2.5 percent lower. The Standard & Poor’s 500 Index set the tone for the Asian day, falling 2.5 percent on Wednesday.

“Negative sentiment is dominating the market,” said Michael McCarthy, a chief strategist at CMC Markets in Sydney. “The market focus keeps shifting whenever there’s positive news. We saw very good trade numbers from China yesterday and yet we’ve seen the rebound being short-lived as the focus shifted to commodities. It’s hard to get bullish."

The MSCI Asia Pacific Index jumped 1.7 percent on Wednesday, its steepest gain in almost a month, and European equities also advanced. In the U.S., a selloff in consumer and technology shares sent the S&P 500 to a three-month low, while the Russell 2000 Index of smaller companies closed in a bear market. E-mini futures on the S&P 500 added 0.7 percent on Thursday.

South Korea’s Kospi index lost 0.9 percent. Australia’s S&P/ASX 200 Index sank 1.6 percent, taking its decline from an April peak to 18 percent. New Zealand’s S&P/NZX 50 Index dropped 0.7 percent. Taiwan’s Taiex slipped 1 percent, while Singapore’s Straits Times Index sank 1.9 percent. Hong Kong’s Hang Seng Index retreated 0.6 percent.

Jakarta Explosions

The Jakarta Composite Index declined as much as 1.8 percent as explosions and gunfire erupted in the Indonesian capital, killing several people. The gauge pared losses to 0.5 percent as the nation’s central bank cut its key interest rate for the first time in 11 months to boost flagging growth.

The Shanghai Composite Index climbed 2 percent, reversing a loss of as much as 2.8 percent and sending a gauge of volatility to the highest levels since September. Stocks rebounded as 28 companies listed on ChiNext small-caps index vowed to take action to stabilize the market and the China Securities Regulatory Commission assured investors that the forthcoming registration system for initial public offerings won’t lead to an oversupply of new shares.

“Any bounce in the markets could be just short-covering rather than a sustainable rebound,” said Bernard Aw, a strategist at IG Asia Pte in Singapore. “Fear is still entrenched in the market, with China concerns continuing to drive sentiment. China’s slowdown is still a concern.”

Shanghai Slump

The Shanghai gauge has slumped 15 percent in 2016, making it one of the world’s worst-performing equity indexes, amid concern about the outlook for the economy and uncertainty over the central bank’s exchange-rate policy.

The nation’s trade surplus widened and exports recovered last month, a report showed Wednesday. Other economic indicators remain in the doldrums. The official purchasing managers index signaled weakness for a fifth straight month in December, while figures over the weekend showed producer prices extended declines to a record 46 months.

Sumitomo Corp. tumbled 5.8 percent in Tokyo as the trading company withdrew its full-year forecasts after booking a 77 billion yen ($653 million) charge on a nickel project in Madagascar. Sony Corp. slumped 4.7 percent after Credit Suisse Group AG cut its share-price target on the stock. Santos Ltd. tumbled 8 percent in Sydney, pacing declines among energy producers as Brent oil traded near $30 a barrel.

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