Asia stocks decline 3%, oil still under $40

Asia stocks decline 3%, oil still under $40

Hong Kong: Asian stocks fell for a third straight session on Tuesday as a continued retreat in oil prices below $40 (Rs1,940) a barrel hit resource-related shares, while auto makers slumped after Toyota Motor Corp.’s bleak assessment of the near-term future.

The uncertain economic outlook continues to bolster low-yielding but safer government bonds, as evidenced by the record $38 billion of two-year notes sold by the US government on Monday for a historic low yield of below 1%.

Shanghai’s main index fell almost 5% after China’s central bank on Monday trimmed interest rates by 27 basis points, in a move that disappointed investors because it was smaller than more aggressive actions by other central banks.

On Monday, figures showed Japanese exports plunging at the fastest annual pace on record in November. The MSCI index of Asia-Pacific stocks outside Japan dropped about 3%.

Though the index is now well off a five-year low hit in November, it remains down 54% for the year in the worst yearly slide in its 20-year history.

Shares in South Korea, Hong Kong, Taiwan and India fell 2-3%. Singapore shares lost more than a percent while Australian stocks fell 0.7%. Hang Seng plunged 2.75% to 14,220.79 points and Sensex dropped nearly 242 points to close at 9,686.75 points.

Oil prices extended their recent sharp falls, falling less than a dollar in Asian trade to trade below $40 a barrel.