Asian stocks fall for first time in 5 days as oil resumes slump

The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo.
The Shanghai Stock Exchange Composite Index is displayed on an electronic stock board outside a securities firm in Tokyo. PHOTO: BLOOMBERG

SINGAPORE (BLOOMBERG) - Asian stocks dropped on Tuesday (Feb 2), with the regional benchmark index heading for its first decline in five days, as material and energy shares led losses after oil resumed its sell-off amid signs China's economy is deteriorating.

The MSCI Asia Pacific Index slid 0.3 per cent to 122.29 as of 9.01am in Tokyo. The gauge on Monday capped its longest winning streak of 2016, gaining 4.1 per cent in four days, as optimism grew that central banks around the world will support financial markets. Crude tumbled on Monday after China's official factory gauge signalled a record sixth straight month of deterioration.

"We're in for a period of continuing caution," Mr Angus Gluskie, a managing director who oversees US$550 million (S$783.4 million) at White Funds Management in Sydney, said by phone. "It's a period of uncertainty. China remains the biggest concern for investors. If the Chinese situation develops more adversely, it could have greater ramifications."

Federal Reserve vice chairman Stanley Fischer said on Monday that the impact of recent market turbulence on US growth could factor into decision-making, helping US stocks shrug off the oil slump to close little changed. Futures on the Standard & Poor's 500 Index fell 0.4 per cent on Tuesday.

Japan's Topix index lost 0.8 per cent, after rallying more than 5 per cent over the previous two days on the Bank of Japan's unexpected stimulus boost by adopting negative interest rates. South Korea's Kospi index slid 0.6 per cent. New Zealand's benchmark gauge added 0.2 per cent. Australia's S&P/ASX 200 Index retreated 0.6 per cent before the nation's central bank reviews its monetary policy.

Futures on the FTSE China A50 Index added 0.2 per cent in most recent trading, while those for Hong Kong's Hang Seng Index slipped 0.2 per cent.

The Shanghai Composite Index slumped 1.8 per cent on Monday after official factory gauge signalled a record sixth straight month of deterioration, raising the stakes for policymakers struggling to prop up the economy amid a second bear market in stocks since June and a currency at a five-year low.

Crude futures fell as much as 0.9 per cent on Tuesday after slumping 6 per cent on Monday. US inventories probably rose by 3.75 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Wednesday.