Asia: Stocks struggle for direction as Chinese investors remain hopeful of more stimulus

Asian equity markets struggled for direction on Tuesday, as lower oil prices offset a rally in Chinese stocks.

The Shanghai Composite Index closed up 1.14%, as investors remained buoyed by the prospect of more stimulus from China’s central bank, while Hong Kong’s Hang Seng declined 0.37%.

“Traders continue to struggle with deciphering the weak Chinese GDP figure yesterday and how much of a warning flag it should be for the rest of the global economy,” said London Capital Group’s analyst Jonathan Sudaria.

“Scepticism about the figure abounds, with suggestions that it’s really in the 3% area but however you look at it, even if you take the supposed fudged figure, China’s is slowing down.”

Meanwhile, a 3% drop in US oil prices overnight intensified concerns over a slowdown in the world’s second-largest economy and weighed on other markets in the region.

Australia’s S&P/ASX 200 slid 0.65%, dragged lower by a sharp decline in energy stocks, which saw Woodside Petroleum, Santos and Origin Energy lose 5%, 3.1% and 2% respectively.

Overnight, the release of the minutes from the latest Reserve Bank of Australia’s meeting offered a more upbeat assessment of the country’s economy, particularly of the bank’s rebalancing efforts aimed at making it less reliant on the mining industry.

“It was all well and good putting its eggs in one basket when the industry was booming but the sharp decline in commodity prices and a slowing Chinese economy has forced the country to find a more sustainable source of growth and clearly progress is being made,” said Oanda’s senior market analyst Craig Erlam.

Elsewhere, Japan’s Nikkei Stock Average closed 0.42% higher as investors benefitted from solid earnings from US firms and by the continued prospect of more easing measures from global policy makers, while South Korea’s Kospi rose 0.45%.

On the currencies front, the Australian dollar rose 0.45% against its US counterpart, while the Japanese yen slid 0.07% against the greenback.

Meanwhile, the Malaysian ringgit tumbled as much as 1.8% against the dollar during the session, reaching its weakest level against the US currency in over a week.