Asia’s share rally stalled yesterday with markets battling a fresh fall in the price of oil and renewed fears over the Chinese economy.
Japanese stocks fell as a stronger yen hit exporters while Shanghai also dropped, after private indicators showed confidence in the manufacturing and service sectors falling to new lows.
In Tokyo, the Nikkei 225 down 0.37%  at 16,052.05 points; Shanghai – composite fell 0.81% at 2,903.33 points and Hong Kong - Hang Seng down 0.25% at 19,414.78 points at the close yesterday.
The impact of the gathering 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 on Tuesday.
“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 Corp, according to Bloomberg News.
“The environment remains volatile with investors focused on oil prices.”
US crude for April fell 2.58% while Brent for April was down 2.48%, as traders remained doubtful that talks on an output freeze among key crude producers would bear fruit.
US inventories probably expanded further from their highest levels in more than eight decades, according to a Bloomberg survey before the US data today.
“The increase in stockpiles will mean oil will remain lower for longer,” Evan Lucas, a market strategist at IG 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 $35 and average around that level.”
Wall Street equities had enjoyed healthy gains on Monday, closing sharply higher after US oil prices surged more than 6%.
But Tokyo lost 0.37% Tuesday 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. The losses came as the Minxin manufacturing index fell to 37.5 in February from 41.8 in January, while the non-manufacturing gauge fell to 37.5 from 43, according to the China Academy of New Supply-side Economics, quoted by Bloomberg.