Asia: Stocks remain under pressure amid China woes, oil price slump

Asia stocks were under pressure on Thursday as Japan’s central bank ruled against negative interest rates to boost the economy, while worries over China's economy persisted.

Japan’s Nikkei index closed down 2.43%, continuing its decline after ending in a bear market on Wednesday due to equities having dropped at least 20% from a recent peak.

The slide in the market showed no signs of letting up after Bank of Japan Governor Haruhiko Kuroda said on Thursday he wasn’t considering adopting a negative interest rate policy. Instead, he signalled that any further stimulus would likely be an expansion of the asset purchase programme.

"There are pros and cons of adopting negative interest rates... The Federal Reserve didn't adopt negative interest rates and yet, its policy succeeded in stimulating the US economy," he said.

The Japanese yen as last up 0.1% at 116.80 to the US dollar.

In Hong Kong, the Hang Seng index dropped 1.8% to its lowest close since June 2012, erasing gains earlier in the session.

The three-month lending rate between Hong Kong banks jumped to 0.75% on Thursday, compared to 0.4% the previous day, the highest since April 2009 after the global financial crisis.

The Hong Kong dollar traded at 7.8190 to the US dollar, roughly unchanged from late Wednesday.

The Shanghai Composite was also in the red, falling 3.25% at the closing bell.

Concerns over China’s slowing economy carried on even after the central bank made an aggressive cash injection into the country’s financial system.

The People’s Bank of China offered 400bn yuan worth of short-term loans to commercial lenders on Thursday through its open-market operations.

The spot yuan was trading up 0.08% against the US dollar after the close.

Meanwhile, oil prices remained under pressure on worries about an oversupplied market, further aggravated by news that Iran will lift production after sanctions were lifted. Brent crude fell 0.14% to $27.84 per barrel and West Texas Intermediate decreased 0.35% to $28.25 per barrel at 1047 GMT.

“The ongoing pain of falling oil prices and heightened anxieties over slowing global growth have renewed a fresh wave of risk aversion and this has consequently punished the global stock markets,” said FXTM research analyst Lukman Otunuga.

“Asian equities remain under intense pressure despite China’s central bank injecting $48 billion worth of liquidity into the financial system in a bid to attain stability.”