The volatility that has characterised the start of the year extended another session on Friday, with beleaguered Asian markets mostly falling with investors rushing to the sidelines after some early promise.
The day started well following a surge on Wall Street but momentum faded in the afternoon as the common themes of falling oil prices and China’s struggling economy — which have wiped trillions of world markets so far in 2016 — resurfaced.
Shanghai again led the losses, ending 3.6 percent down to top off a roller-coaster week as a better-than-expected reading on Chinese trade failed to eradicate worries about the economy, which is at its weakest in 25 years.
The losses followed a near two percent rise Thursday, which reports said was fuelled by government cash buying key state-backed companies.
The index has now fallen almost 20 percent since the end of last year as China’s leaders struggle to get a grip on the growth slowdown while their bungling of the crisis, and their recent weakening of the yuan currency, has reverberated globally.
“Sentiment on the yuan has to stabilise before we see stability returning to the equity market,” said Ronald Wan, chief executive at Partners Capital International in Hong Kong.
Friday saw most regional bourses tick cautiously higher before going into reverse.
Tokyo fell 0.5 percent, Sydney lost 0.3 percent, Seoul shed 1.1 percent and Singapore slipped 0.5 percent in late trade. Hong Kong slipped 1.3 percent in the afternoon. However, there were gains in Wellington, Taipei and Manila.
“The week has certainly been unpredictable and very volatile,” Geoffrey Ng, a Kuala Lumpur-based director at Fortress Capital Asset Management, told Bloomberg News.
– ‘Significant volatility’ –
He added that as regional markets have fallen “we?re seeing opportunities emerge”, although he said it was hard to gauge what the trend will be in the next few weeks.
US dealers opened the door to a bright trading day, with all three Wall Street indexes ending sharply higher.
Traders took heart after James Bullard, head of the Federal Reserve’s St. Louis Branch — considered in favour of more rate hikes — suggesting the bank might be cautious about additional rises in light of the latest market turmoil.
A recovery in oil prices also boosted sentiment in New York, with both contracts for the black gold having fallen below $ 30 a barrel this week for the first time in 12 years.
However, it resumed its downtrend in Asia with West Texas Intermediate down 2.7 percent and Brent off 1.7 percent in the afternoon. Oil has dived by three quarters in the past 18 months owing to weak demand, a slowing global economy and a supply glut.
The retreat in crude has battered Anglo-Australian mining giant BHP, which said Friday it expects to post a US$ 7.2 billion pre-tax writedown, adding that it will further reduce the number of onshore US rigs.
Chief executive Andrew Mackenzie blamed “significant volatility and much weaker” prices in the oil and gas industry, adding that the company had been forced to reduce its medium- and long-term price assumptions.
However, the firm’s stock price still climbed 1.3 percent Friday, although it sank 40 percent last year because of the ongoing drop in commodity prices.
– Key figures around 0730 GMT –
Tokyo – Nikkei 225: DOWN 0.5 percent at 17,147.11 (close)
Shanghai – Composite: DOWN 3.6 percent at 2,900.97 (close)
Hong Kong – Hang Seng: DOWN 1.4 percent at 19,545.01
Euro/dollar: UP at $ 1.0882 from $ 1.0865 Thursday
Dollar/yen: DOWN at 117.67 yen from 118.06 yen
New York – Dow: UP 1.4 percent at 16,379.05 (close)
London – FTSE 100: DOWN 0.7 percent at 5,918.23 (close)
