Asian Stocks Struggle, China Steadies on Stimulus Chatter

Sliding oil prices weigh on stock markets globally even as mounting talk of domestic stimulus aids China shares.

2 min read
Chinese shares seemed to be faring better for once. (Photo: Reuters)
  • Asia shares struggle as sinking energy stocks flatten Wall St
  • Sliding oil prices weigh on stock markets globally
  • Mounting talk of domestic stimulus aids China shares

Asian share markets slipped early Wednesday as a relentless slide in oil prices wiped out an attempted rally on Wall Street and dealt a fresh blow to risk appetite.

US crude wallowed at its lowest since 2003 after the world’s energy watchdog warned the market could “drown in oversupply”. US crude futures shed another 49 cents to a new trough at $27.97 in early trade, while Brent crude was quoted at $28.76 a barrel.

Equity markets reacted by reversing some of Tuesday’s rare gains, and MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent. Japan’s Nikkei fell 0.7 percent.

China Keeps Ears Pricked For Stimulus Chatter

Chinese shares seemed to be faring better for once with the benchmark Shanghai Composite Index recouping modest early losses to stand just 0.1 percent lower. That followed a 3.25 percent bounce on Tuesday. Likewise, the CSI300 index of the largest listed companies in Shanghai and Shenzhen was just a whisker weaker, having risen 2.95 percent the previous session.

The People’s Bank of China (PBOC) seemed to be succeeding in deterring yuan sellers, at least for the moment, and fixed the currency at a firm 6.5578 per dollar.

A raft of new regulations have seen yuan trading volumes fall off sharply, and the gap between its onshore level and offshore valuations has narrowed.

Late on Tuesday, the central bank announced it would inject more than 600 billion yuan ($91 billion) into the banking system to help ease a liquidity squeeze expected before the Lunar New Year in early February.

Such a move is usual before the holidays and stopped well short of an actual cut in bank reserve requirement ratios (RRR).

Still, analysts assume an easing is only a matter of time given soft readings on industrial output and retail sales for December, a sorry bookend to a year when the economy grew at the slowest pace in a quarter of a century.

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