Asian share markets slipped early Wednesday as a relentless slide in oil prices wiped out an attempted rally on Wall Street and dealt a fresh blow to risk appetite.
U.S. crude wallowed at its lowest since 2003 after the world’s energy watchdog warned the market could “drown in oversupply”. U.S. crude futures CLc1 shed another 49 cents to a new trough at $27.97 in early trade, while Brent crude LCOc1 was quoted at $28.76 a barrel.
Equity markets reacted by reversing some of Tuesday’s rare gains, and MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.3 percent.
Japan’s Nikkei .N225 fell 0.7 percent, while Australian stocks .AXJO lost 0.4 percent.
Chinese markets had led the bounce on Tuesday with the CSI300 index .CSI300 up 3.0 percent and the Shanghai Composite Index .SSEC rising 3.2 percent.
That rally was puzzling to many given the economic news from China was hardly bright, and the International Monetary Fund cut its global growth forecasts for the third time in less than a year.
Dealers were left to cite speculation of further Chinese policy stimulus as a possible excuse.
China’s central bank late Tuesday did reveal it would inject more than 600 billion yuan ($91.22 billion) into the banking system to help ease a liquidity squeeze expected before the Lunar New Year in early February.