Asia stocks extend rally as oil pushes higher

By AFP January 25, 2016 13:14

Asia stocks extend rally as oil pushes higher

Having set the tone for global trading floors Friday with sharp gains, regional dealers took up the mantle again, with Hong Kong, Tokyo and Sydney leading the charge.

Energy firms were among the biggest winners after oil prices surged 10 percent on Friday, halving the losses suffered so far in 2016 that have been a key cause of the global market rout.

However, while analysts said the snapback — after three weeks of heavy selling — was due, they warned that the volatility which has infected markets from Asia to the Americas would likely continue.

The rally comes at the start of a full week of market-moving news, including policy meetings by the US and Japanese central banks.

There will be close scrutiny of the Bank of Japan after a report last week said policymakers were considering ramping up its already vast stimulus programme to avert a deflation threat that has been exacerbated by plunging oil prices.

That came a day after the head of the European Central Bank, Mario Draghi, said he would consider further easing its own monetary policy.

There is also increasing speculation the Federal Reserve will delay another interest rate rise for now, having increased the cost of borrowing in December for the first time in a decade.

‘Eventful week’

“There will be some waiting and seeing among policymakers until they know how this market volatility will affect the global economy,” Michael McCarthy, chief strategist at CMC Markets in Sydney, told Bloomberg News.

“Given the depression in the markets, there’s scope for the market to add to Friday’s gains. We’ve got a very eventful week, with the BoJ and Fed meetings, so there’s a lot for investors to react to. Volatility is likely to continue.”

Comments from BoJ governor Haruhiko Kuroda, which tried to temper expectations for any easing this week, seemed to have little impact on the rare show of confidence across regional exchanges.

Hong Kong stocks were 1.4 percent higher in the afternoon, Tokyo gained 0.9 percent by the close and Sydney finished 1.8 percent stronger. Shanghai ended up 0.8 percent.

There were also healthy advances for Seoul, Singapore, Manila, Taipei, Wellington and Jakarta.

Oil prices kicked on from last week’s surge. US benchmark West Texas Intermediate put on 1.2 percent and Brent 1.6 percent. On Friday Brent gained 10 percent and WTI nine percent.

Among energy firms to benefit, Hong Kong-listed CNOOC added five percent and PetroChina was three percent up. In Sydney, Woodside Petroleum gained 3.8 percent and Santos put on 4.2 percent.



By AFP January 25, 2016 13:14

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