Asian stocks won a temporary reprieve on Friday after oil prices snapped their eight-day rout, helping to lift battered energy shares even as investors remained on edge as they looked for signs of stability in China’s economy and its volatile markets. Asian stocks, meanwhile, plummeted to three-and-a-half-year lows.
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United States stocks staged a rally Thursday, shaking off early losses as a bounce in oil prices lifted sentiment and helped propel a 1.7 percent gain in the S&P 500. The Aussie nosed over 70 US cents, from a four-month trough of $0.6910 plumbed on Thursday, but was last down 0.5 percent at $0.6944. Both were heading for a weekly loss of more than 10 percent following a similar tumble last week.
Shanghai: China’s bank lending declined sharply in December from November, the central bank said on Friday, despite moves to keep the world’s second largest economy from slowing further with looser monetary policy.
The slowdown is hammering commodity markets that had long relied on ravenous Chinese demand for raw materials.
Slight gains in early early trade put the yuan 0.1% up on the week, but it was still almost 1.4% weaker against the dollar than it started the year and has lost almost 5% since August.
The Hong Kong dollar traded at 7.7930 against the USA dollar at 8pm on Friday, bringing its loss for the last two trading sessions of the week to 0.4 per cent. For the full week, the Hong Kong dollar ended down 0.36 per cent, the most since October 2003. The People’s Bank of China (PBOC) set a slightly weaker mid-point rate for the yuan, but the fix has been broadly steady for more than a week, signaling a determination to hold the line against expectations of a sustained depreciation of a currency that has lost 5 percent of its value against the dollar since August.
In December, banks’ new lending reached 597.8 billion yuan, down 345.3 billion yuan from December 2014 and lower than the expected 700 billion yuan, said the central bank.
Beijing will announce fourth-quarter and 2015 GDP figures on Tuesday.
USA retail sales data due later on Friday will also be on investors’ radar as they try to gauge the likelihood of the Federal Reserve raising interest rates again in March.
“The oil market is just a mess and it all seems to be stemming from that”, said Tobias Davis, a currency hedging manager with Western Union in London.
Further steep price declines risk plunging oil-producing nations and companies that took out debt – particularly debt denominated in the strengthening US dollar – into insolvencies that lead to default, analysts say. The spot market opened at 6.5920 per dollar and was changing hands at 6.5869 at midday, 21 pips firmer than the previous close.
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.
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That index has dropped 18.03 percent since the start of 2016.
