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Asian Stocks Fell due to Oil Prices and Weak Outlook on China

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March 9
7:34 AM 2016

Stock markets in Asia dropped after three weeks rally. Declining oil prices and concern for economic outlook of China triggered the decline.

In Japan, Nikkei fell 1.0% on Monday, while Topix Index fell 1.3% on the next day. MSCI Asia Pacific Indes fell 0.6% to 124.82 and heading for biggest loss in two weeks. Other indexes in Asia also declined, South Korean Kospi was down 0.3%, Australia's S&P/ASX 200 Index dropped 0.3% and so was New Zealand's S&P/NZX 50 Index also fell.

Shanghai Composite Index ended Tuesday trade with recover 0.1% after falling 3.3%. Hang Seng futures indexes tumbled 0.2% and FTSE China A50 Index dropped 0.7%. Chinese equities was also down 1.5% following the steepest drop in Chinese exports since 2009 on Tuesday.

General Manager of investment information at SMBC Nikko Securities Inc. Chihiro Ohta told Bloomberg, "Yesterday's China trade data has become the seismic center for concerns over the global economy," he said over the phone from Tokyo.

"The recent trend is that when the market's up everything goes up, and when it's down everything is down. It's not a nimble market where certain areas rise and certain areas fall."

Following a three-week rally, markets are waiting for European Central Bank monetary policy review on Thursday. Meanwhile weakening China's trade and Japan economy also triggered investor to wait and see.

"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 told Straits Times. "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."

In the commodities, oil prices fell about 3%, to end six days of gains in Brent crude futures. Oil price in Brent fell to $39.65 after reaching the highest level of $41.48 earlier. While U.S. stockpiles reached another record high again last week.

"Although oil prices have risen sharply from the trough, many investors are not yet convinced if things have improved that much and I suspect they judged now is a good time to sell," Tatsushi Maeno, managing director of PineBridge Investments told Channel News Asia. He added, "But I do believe that this year the global economy will prove better than last year."

Following a strong rally in three weeks, Asian stocks dropped. Declining oil prices and weak economic outlook in China triggered the drop. However, analysts expected this year to be better that last year.

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