Asia Markets

China markets close up as Japan, Australia near bear markets

A stock investor gestures as she checks share prices at a security firm in Fuyang, east China's Anhui province.
STR | AFP | Getty Images

Markets in Asia closed mostly lower Monday, on the back of another Wall Street sell-off Friday. Major indexes in Australia and Japan were nearing bear market territory, down over 18 percent from their 52-week closing highs.

Down Under, the Australian market finished the session in the red, with the main ASX 200 index closing down 34.10 points, or 0.70 percent, at 4,858.70, nearing bear market territory after falling 18.78 percent from its 52-week high of 5,982.69 set April 2015. Earlier, the index traded off as much as 1.80 percent. Energy sector weighed heavily on the index, down 3.36 percent.

In Japan, the retraced some of its early losses to close down 191.54 points, or 1.12 percent, at 16,955.57 after falling as much as 2.39 percent earlier in the session. The index is off 18.74 percent from its 52-week high of 20,868.03, set June 2015.

South Korea's Kospi closed flat at 1,878.45, after initially slipping as much as 1.19 percent at market open.

Chinese markets wavered between gains and losses in a volatile session. The closed up 13.51 points, or 0.47 percent, at 2,914.48 after falling as much as 1.84 percent earlier in the session. The index was off 43.58 percent from a 52-week high of 5,166.35 set June 2015 and off 11.58 percent since the first trading day of 2016.

The Shenzhen composite closed up 34.19 points, or 1.90 percent, at 1,830.32 after opening down 2 percent and the CSI300 index finished 11.99 points, or 0.38 percent, higher at 3,130.72. Hong Kong's Hang Seng Index was down 0.96 percent.

Elsewhere, Taiwan's Taiex closed up 49.17 points, or 0.63 percent, at 7,811.18, following an election over the weekend where the independence-leaning Democratic Progressive party (DPP) won a convincing victory in both presidential and parliamentary elections.

China data-deluge expected this week

With China set to release its fourth-quarter gross domestic product (GDP) numbers for 2015 on Tuesday, some analysts believe the recent rout in Chinese equities may worsen. China will also be releasing a slew of economic data Tuesday, including industrial production, fixed asset investment and retail sales.

Vishnu Varathan from Mizuho Bank said in a morning note, that if China misses its full-year economic growth guidance of 7 percent, which is widely expected, it will be "an excuse to sell."

He added that with China equities down 9 percent last week and a "devastating" 18-22 percent for the year, there's an "asymmetric" risk the GDP data Tuesday could spur "half empty tendencies" that could extend the China, and wider emerging market and commodity sell-off.

Tim Condon from ING said in a separate note that given the risk and uncertainties surrounding China, "any downside miss poses significant risk to financial markets."

Earlier, the National Bureau of Statistics released the December new home prices, which rose 7.7 percent on-year, up from November's 6.5 percent increase. Shanghai and Shenzhen-listed property stocks were mostly up, with Lvjing finishing up 4.13 percent, Gemdale up 2.87 percent, Shanghai Shi Mao gaining 1.87 percent and Poly Real Estate seeing gains of 0.23 percent.

Before market open, the People's Bank of China (PBOC) fixed its dollar-yuan mid-point at 6.5590, signaling a stronger yuan compared with Friday's fix of 6.5637.

Oil futures retrace some losses

Major energy stocks in Australia sold off, with Santos tumbling 8.36 percent, Oil Search falling 5.06 percent and Woodside Petroleum sliding 2.59 percent by the market close.

Oil futures extended losses during Asian trade. The West Texas Intermediate (WTI) was down 2.01 percent at $28.83 a barrel, after falling to a session low of $28.36 earlier. Last week, it declined 6.33 percent. Globally traded Brent futures traded down 2.49 percent at $28.23 a barrel, after reaching a session low of $27.67 in the morning. Last week, Brent futures shed 8.27 percent.

Other energy plays across the region also saw red, with Japan's Inpex losing 1.45 percent and Japan Petroleum sliding 2.05 percent. South Korean oil plays such as S-Oil, SK Innovation and GS Holdings closed mixed, between down 0.94 and up 0.38 percent.

In China, Hong Kong-listed shares of CNOOC, PetroChina and Sinopec were mixed, between down 4.11 and up 0.25 percent.

Concerns about increased output in an already oversupplied oil market were heightened after sanctions on Iran were lifted at the weekend.

Iran's deputy oil minister said the country was ready to increase its crude oil exports by 500,000 barrels a day.

There's another front opening in worries over commodity prices. Taimur Baig, chief economist for Asia at Deutsche Bank, told CNBC's "Street Signs Asia" that another growing area of concern was the falling Baltic Dry Freight rates. The main Baltic Dry Index, which measures the cost of shipping dry bulk cargoes, including iron ore, cement and coal among others, fell 10 points, or 2.61 percent, to a record low at 373 points last Friday.

"As far as dry goods are concerned, there's this massive overcapacity and too much inventory around the world. And demand for that is falling," said Baig. "We saw this happen in 2008 and although in terms of movement of oil, in container ships, those numbers are not that alarming. But the dry freight one is particularly worrisome."

Resource producers take a hit

Resources and financial stocks in Australia closed mostly down. Shares of Rio Tinto and BHP Billiton, the country's two biggest miners, slid 2.08 and 2.92 percent respectively. Iron ore producer Fortescue erased losses to finish up 1.30 percent.

Among the country's so-called four biggest banks,