Asia markets erase gains; Shanghai tumbles 3.5% into bear territory

Kazuhiro Nogi | AFP | Getty Images

Major Asian stock markets ended down Friday, erasing early gains despite a positive finish from Wall Street overnight.

In another late spate of sell-offs, the Shanghai composite was down 105.43 points, or 3.51 percent, at 2,902.21, closing in bear market territory. The index is down some 20.52 percent since its most recent high of 3,651.76 on December 22. The Shenzhen composite fell 63.23 points, or 3.40 percent, at 1,796.13.

The ASX 200 closed down 16.58 points, or 0.34 percent, at 4,892.80, after trading at a session high of 4,997.10 in the morning.

Japan's Nikkei 225, which was initially up by as much as 1.77 percent, fell into negative territory, finishing 93.84 points, or 0.54 percent, lower at 17,147.11. On Thursday, the Nikkei lost 2.68 percent. In total, the Nikkei has lost 9.91 percent since the last trading day of 2015.

South Korea's Kospi also erased gains to close down 21.14 points, or 1.11 percent, at 1,878.87.

Angus Nicholson, market analyst at spreadbetter IG, wrote in a note that the "weight of China seemed to steadily push the steam out of the markets" even before Chinese markets opened.

Concerns remain over China prospect

Data released before the markets opened revealed that Chinese banks gave 597.8 billion yuan ($90.76 billion) in new loans for December, notably lower than the 708.9 billion loaned out in November, sparking renewed concerns over the economy's health.

On the other hand, data showed companies raised more credit via alternative channels, such as bonds and shadow banking, Reuters reported.

"China's latest monetary and credit data have underlined the growing issue of access to capital to small and medium enterprises (SMEs) in China," said Nicholson, adding the drop-off seen in SMEs in the official and Caixin PMIs appeared to increasingly be related to this lack of access to capital.

But, offering some stability to the Chinese market, the People's Bank of China (PBOC) set the yuan mid-point fix at 6.5637, comparatively flat in relation to Thursday's fix of 6.5616. The dollar-yuan pair traded 0.05 percent lower at 6.5855.

Oil slips again in Asian trade

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CNBC 100

Oil prices saw no respite during Asian trading hours despite making slight gains in overnight trade.

West Texas Intermediate (WTI) was down 2.12 percent at $30.54 a barrel, after closing up at $31.20 in the U.S. session. The globally traded benchmark, Brent crude, was down 1.30 percent at $30.48 a barrel, following its overnight finish of $31 a barrel.

Energy plays across the region traded mixed and early strong performers trimmed much of their gains. Shares in Santos closed up 0.35 percent, after rising as much as 3 percent in early trade; Woodside Petroleum finished 0.45 percent higher, while Oil Search closed 1.44 percent up.

In Japan, Inpex finished 0.48 percent lower, after gaining as much as 2.19 percent in morning trade. Japan Petroleum was down 0.14 percent.

Chinese mainland oil plays were negative, with shares of China Oilfield losing as much as 4.76 percent at market close. Hong Kong-listed shares of CNOOC, PetroChina, and Sinopec were down between 2.46 and 4.74 percent.

Sharp finish up 14% as Hon Hai raises investment cap

In Japan, electronics maker Sharp closed up 14.68 percent after the Yomiuri daily reported that Taiwan's Hon Hai Precision Industry, better known as Foxconn, would offer to invest 700 billion yen ($5.9 billion) in the company, raising the cap from 500 billion yen offered previously. Shares were up as much as 18 percent in late-morning trade.

Hon Hai shares traded down 0.92 percent.

Major Japanese exporters pared early gains to finish down, with Sony 1.51 percent lower and Nissan down 1.91 percent. The dollar-yen pair fell 0.3 percent to 117.68 after climbing as high as 118.26 earlier. A stronger yen is usually considered negative for Japan's exporters as it trims earnings when translated back into the home currency.

Resources producers in Australia closed mixed, with shares of Rio Tinto up 1.70 percent, BHP Billiton rising 1.28 percent and Fortescue adding 0.99 percent. Gold stocks finished mostly down, with Alacer Gold shedding 3.88 percent and Newcrest losing 2.45 percent.

Financials slipped in afternoon trade, with Australia's so-called Big Four banks - ANZ, Commonwealth Bank of Australia, NAB and Westpac - closing down between 0.22 and 0.68 percent.

South Korea's SK Hynix erased gains to end down 3.94 percent. Its shares were up as much as 0.72 percent in early trade, after the memory chip maker announced yesterday it planned at least 6 trillion won ($5 billion) in capital expenditure in 2016 to add capacity and improve production technology, according to reports.

Overnight in the U.S.

Stateside, major indexes closed higher, with the S&P 500 up 31.55 points, or 1.67 percent, at 1,921.83.

The Dow Jones industrial average was up 227.64 points, or 1.41 percent, at 16,379.05, while the Nasdaq composite closed higher by 88.94 points, or 1.97 percent, at 4,615.00.

On the data front, China's December foreign direct investment is due, as well as trade numbers for Indonesia.

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