Asian Stocks Drop as Energy Firms Retreat, Yen Drags Japan Lower

  • Chinese equities reverse midday losses, reach one-month high
  • Australia, Japan, Singapore markets all resume falls Wednesday

Asian stocks declined, after rebounding more than 5 percent over the previous two days, as energy shares sank and a stronger yen weighed on Japanese shares. Chinese equities rose to the highest in a month, reversing a midday loss.

The MSCI Asia Pacific Index lost 0.9 percent to 117.64 as of 4:24 p.m. in Hong Kong. The gauge had rallied this week after sinking to a 3 1/2-year low on Friday amid concern about the growth outlook for the world’s largest economies and the rout in oil. Woodside Petroleum Ltd. fell 6.9 percent in Sydney on Wednesday after saying full-year profit declined 99 percent as the energy producer wrote down the value of its assets.

“Stay cautious,” Mark Lister, head of private wealth research at Craigs Investment Partners in Wellington, which manages about $7.2 billion, said by phone. “Don’t be afraid to reduce risk because we expect things to be volatile from here -- it’s a relatively defensive message. There are a lot of economic issues that need to be worked through. We’ve been incrementally paring back” risk positions, including equities, he said.

The Topix index lost 1.1 percent, wiping out an earlier gain of 1.1 percent. Japanese stocks are coming off the best two-day rally since 2008, including an 8 percent surge on Monday. The yen rose 0.5 percent to 113.47 per dollar after climbing 0.5 percent Tuesday as the agreement between Saudi Arabia and Russia weighed on oil prices, sending investors toward haven assets.

Australia’s S&P/ASX 200 Index slipped 0.6 percent and New Zealand’s S&P/NZX 50 Index advanced 0.2 percent. South Korea’s Kospi index fell 0.2 percent and Singapore’s Straits Times Index slipped 1.3 percent.

The Shanghai Composite Index rose 1.1 percent after jumping 3.3 percent on Tuesday following data that showed the nation’s banks doled out a record amount of loans in January. Hong Kong’s Hang Seng Index lost 1 percent and the Hang Seng China Enterprises Index of mainland firms listed in the former British colony declined 1.2 percent.

Both UBS Group AG and Bocom International Holdings Co. said China’s lending surge can’t continue, while Standard & Poor’s said the increase in debt relative to gross domestic product could pressure the country’s credit rating.

Oil Output

Saudi Arabia and Russia agreed to freeze oil output at near-record levels, the first coordinated move by the producers to counter a slump that has pummeled economies, markets and companies. Oil slipped below $30 a barrel after the accord was announced, signaling traders see no immediate end to the global supply glut.

“While the Russia and Saudi Arabia agreement to freeze production is slightly positive, it’s not going to ease the oversupply situation," said Bernard Aw, a strategist at IG Asia Pte in Singapore. “Overall market sentiment is still pretty cautious. Investors are concerned the global economy is slowing down.”

Futures on the Standard & Poor’s 500 Index fell less than 0.1 percent after the underlying gauge rose 1.7 percent on Tuesday, capping the best two-day gain in five months as the market caught up with a global rally following a holiday on Monday. Minutes of the Federal Reserve’s most recent meeting, where officials indicated they were monitoring the turmoil in markets, are due Wednesday.

SoftBank Group Corp. surged 5.8 percent in Tokyo, extending Tuesday’s 16 percent gain, after saying it’ll spend $4.4 billion buying back its shares.

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