Asia's share rally stalled today with markets battling a fresh fall in the price of oil and fears for the Chinese economy.

Japanese stocks fell as a stronger yen hit exporters while Shanghai also closed down, after the first indicators for Asia’s biggest economy this month showed private gauges of manufacturing and services falling to new lows, and a reading of business confidence slipped.

The impact of a Chinese slowdown and the collapse in commodity prices helped push global mining giant BHP Billiton, which counts China as a key customer, to a huge six-month net loss today.

"China's slowdown is yet to fully play out and markets are watching what policies will be rolled out to address that," said Nescyn Presinede, trader at Manila-based Rizal Commercial Banking Corporation, according to Bloomberg News.

"The environment remains volatile with investors focused on oil prices."

US crude for April, a new contract, fell 1.62% while Brent for April was down 1.56%, as traders remained doubtful that talks on an output freeze among key crude producers would lead to agreement.

The International Energy Agency warned yesterday world oil prices are unlikely to rise from current levels before 2017, and even then their recovery will be slow as massive oil stocks feed into the market.

US inventories probably expanded further from their highest levels in more than eight decades, according to a Bloomberg survey before US data tomorrow.

"The increase in stockpiles will mean oil will remain lower for longer," Evan Lucas, a market strategist at IG Ltd in Melbourne, told Bloomberg.

"The supply side is a big hurdle. We expect prices to edge up ever so slightly in the second quarter, it'll inch toward US$35 and average around that level."

Japan running out of options

Wall Street equities had enjoyed healthy gains yesterday, closing sharply higher after US oil prices surged more than 6%.

But Tokyo closed down 0.37% today after early gains fizzled out as crude prices reversed course and the yen rose, which is a negative for exporters' profitability and tends to hit demand for their shares.

Auto parts giant Takata dived on news it could be hit with tens of millions more recalls linked to a deadly airbag scandal.

Analysts warned that the Bank of Japan may be running out of policy tools after it announced a negative interest rate policy last month – a move widely seen as a desperate effort to kick-start growth.

More easing measures would tend to weaken the yen.

"It's beginning to feel like the BoJ is completely stuck," Tetsuo Seshimo, a portfolio manager at Saison Asset Management, told Bloomberg.

"It's difficult to imagine any scenarios where the BoJ can take action."

Chinese stocks lost 0.81% and the yuan declined after the People's Bank of China lowered its daily reference rate by the most in six weeks.

Hong Kong was down 0.15% in late trade.

In Australia, global mining giant BHP Billiton today posted a first-half net loss of US$5.67 billion and slashed dividends as plunging commodity prices hammered the bottom line.

The result in the six months to December 31, dogged by impairments, compared to a US$4.26 billion profit in the previous corresponding period, with revenue dropping 37% to US$15.71 billion.

But BHP's share price, which has plunged over the past 12 months, ended 2.62% higher at Aus$17.63 as analysts suggested the results were not unexpected.

Yet the dramatic fall in the price of oil since 2014 helped Australian carrier Qantas today post a huge rise in first-half net profit, which soared 234%.

Overall, Sydney closed 0.43% down while South Korean shares fell 0.11% today. – AFP, February 23, 2016.
Source: AFP