Asian shares slide and Japan extends losses as global stocks enter bear market

A pedestrian looks at closing information of the Tokyo's Nikkei Stock Average and other global stock markets in Tokyo, Japan.
A pedestrian looks at closing information of the Tokyo's Nikkei Stock Average and other global stock markets in Tokyo, Japan.PHOTO: EPA

SINGAPORE (BLOOMBERG) - Asian stocks fell on Friday (Feb 12), with the regional benchmark index heading for its biggest weekly decline in a month, after global equities sank into a bear market and Japanese shares extended losses as the yen strengthened.

Tokyo stocks dived more than five pe rcent by the midday break, playing catch-up with a global sell-off after a one-day holiday amid deepening worries about the world economy. The benchmark Nikkei index plunged 5.34 per cent, or 838.74 points, to 14,874.65 as a stronger yen hammered exporters.

The broader Topix index sank 5.55 per cent, or 70.25 points, to 1,194.71. The gauge is headed its biggest daily decline since August and for 13 per cent weekly loss, its worst since October 2008.

The MSCI Asia Pacific Index was down 2.1 per cent as of 10:40 am Tokyo time, on track for a weekly decline of 5.4 per cent. Japan's Topix index slipped 4.4 per cent as the market resumed trading following Thursday's holiday.

Combined losses in US and European equities dragged the MSCI All-Country World Index down 20 per cent from a record reached in May, the common definition of a bear market.

Hong Kong's Hang Seng Index lost 0.8 per cent, the Kospi index in Seoul slipped 1.1 per cent, while Australia's S&P/ASX 200 Index sank 1 per cent.

Markets in mainland China, Taiwan and Vietnam remain closed for the holidays.

Futures on the Standard & Poor's 500 Index rallied 0.3 per cent. The S&P 500 reduced a slump of as much as 2.3 per cent on Thursday to close down 1.2 per cent.

Central bank activity remained in focus as negative interest rates have eclipsed investor worries over China's fading economy and the near two-year collapse in oil prices. Sweden lowered interest rates that are already below zero, about two weeks after Japan shocked markets by imposing negative rates in a bid to quell the turmoil.

Investors ignored a second day of testimony from Janet Yellen, whose indication that the Federal Reserve won't rush to raise benchmark interest rates in the face of global ructions failed to stem the selloff in risk assets.

"We've entered a different phase in the market," Juichi Wako, a senior strategist at Nomura Holdings in Tokyo, said by phone. "We're not simply in a risk-off mode, the market's fallen to the point of pricing in a recession in the US. The market is saying we're worried no matter what Yellen says and their reaction shows there can be no real relief until we can truly see what's happening in the US economy."

The Topix is trading at the lowest level since October 2014, poised for its biggest weekly decline since October 2008 as the yen traded near a 15-month high. Bank of Japan Governor Haruhiko Kuroda will speak in parliament later on Friday.

West Texas Intermediate oil jumped as much as 4.7 per cent Friday in New York after comments by an Opec energy minister sparked hopes of a coordinated production cut, yet analysts said such a move remained unlikely and that oversupply would persist.

The contract slumped 4.5 per cent on Thursday as crude stockpiles at the delivery point for New York futures expanded to a record.