Asian stocks mostly slumped yesterday as sentiment was dragged down by a renewed drop in oil prices and a resurgent yen sucked the air out of the Japanese market.
In Tokyo, the Nikkei 225 fell 0.85% at 15,915.79 points; Shanghai – Composite up 0.88% at 2,928.90 points and Hong Kong - Hang Seng down 1.15% to 19,192.45 points at the close yesterday.
Crude weakened after Iran’s oil minister called a proposal by Saudi Arabia and Russia to freeze production “ridiculous”, as it seeks to boost output after years of sanctions-constrained sales.
Saudi Arabia has ruled out a cut in production.
Analysts warned that current market turmoil was unlikely to ease in the short term.  
“It will take some time before market sentiment does turn,” Kerry Craig, global market strategist at JPMorgan Asset Management, told Bloomberg TV in Melbourne.
“It’s still very pessimistic. Most investors are very risk-averse. You need catalysts or triggers such as an oil price stabilisation, clarity about what the Fed is actually going to do and what we see happening with the Chinese currency and economic data.”
The pound touched a seven-year low on worries that Britain may vote to leave the European Union, as Prime Minister David Cameron ramps up his bid to stay inside the 28-nation bloc.
Sterling dropped as low as $1.3965, its lowest since March 2009.
Asian bourses tracked losses in global markets, with Tokyo stocks weighed down by the strength of the yen which is seen as a safe-haven asset.
US and European markets had been battered on Tuesday after a closely-watched report rated German business confidence in February at the lowest level since December 2014, and Wall Street fell more than 1% on Tuesday.
The price of oil continued to sink yesterday, with US benchmark WTI for April delivery down 2.51%. Brent, also for April, lost 1.59%.
“Iran and Saudi Arabia are showing little desire to lower production, so despite the agreement by the main countries to freeze output it’s clear that alone won’t push oil prices back up to $50 or $60 a barrel,” said Chihiro Ohta, general manager of investment information at SMBC Nikko Securities.
“There are no catalysts to purchase stocks now. We’re not seeing buying ahead of the G20 either,” Ohta told Bloomberg News.
Traders, meanwhile, were betting the US Department of Energy’s weekly petroleum inventories report Wednesday would show another increase in US crude stockpiles.
“There won’t be a pact on output, there’s no possibility of that occurring because there are insufficient levels of trust,” Michael McCarthy, a chief strategist at CMC markets in Sydney, told Bloomberg News.
“The market is still in surplus and will remain that way for some time.”
With oil depressing the outlook, Tokyo shares fell for a second day, ending 0.85% down as the renewed strength of the yen weighed on exporters.
But Shanghai closed almost 1% up, reversing losses from earlier in the day, on expectations of economic reform pledges at an upcoming annual meeting of lawmakers.
Hong Kong ended more than 1% down, on the day its financial secretary John Tsang described the economic outlook as “far from promising”. He forecast growth for 2016 at between one and 2%, down from last year’s 2.4%.
Seoul fell 0.09% while Sydney plummeted more than 2%.
Ahead of a meeting of G20 finance ministers’ and central bank chiefs starting on Friday in Shanghai, there have been calls for increased fiscal support as authorities grapple with reduced monetary leeway. Japan and the eurozone have already seen negative interest rates.
“A lot of people have been wanting to see increased global coordination coming from the G20 given that central banks in the Western world at least seem to be approaching some kind of limit to monetary policy,” said Martin Enlund, chief analyst at Nordea Markets in Stockholm, according to Bloomberg.
Europe’s main stock markets fell once more at the start of trading on Wednesday but losses were far less acute than the previous session.
London dipped 0.2%, Frankfurt dropped 0.2% and Paris lost 0.1%.