Asia markets enjoy fresh rallies as energy firms surge
AFP – Tokyo led another broad rally across Asian markets Thursday as soaring oil prices helped energy firms post bumper gains, following more records on Wall Street.
Japan’s Nikkei ploughed more than three percent higher at the beginning of its first trading day for 2018 as investors played catch-up with two days of advances elsewhere.
Like in New York, petroleum-linked plays were the standout as oil prices sprang to three-year highs on the back of a big freeze in the United States, tensions between major producers Iran and Saudi Arabia, and a weaker dollar.
Both main contracts jumped around two percent on Wednesday and built on those gains in early Asian exchanges.
"Geopolitics has become a bigger factor now that the Iranian protest movement has launched into the open in the past week," Greg McKenna, chief market strategist at AxiTrader.
He added: "My sense is there is some expectation that President Trump may use the protests as a pretext to reimpose sanctions on Iran and possibly unwind the deal the previous administration did which allowed Iran to increase its exports.
"That would take a significant number of barrels per day out of the market."
Japan’s Inpex was 3.4 percent higher, while in Sydney Woodside Petroleum climbed 2.7 percent by the end. In Hong Kong CNOOC added 3.8 percent, Sinopec gained 4.1 percent and PetroChina piled on 5.1 percent.
– Dollar holds up –
Those gains were mirrored in wider markets. Tokyo soared 3.3 percent, Hong Kong added 0.6 percent — marking an eighth straight gain — while Shanghai rose 0.5 percent.
Sydney ended up 0.1 percent, Singapore added 0.3 percent, Taipei was up 0.4 percent and Wellington gained 0.2 percent. However, Seoul slipped 0.8 percent and Manila eased 0.3 percent.
The positive start to the year for equities follows a stellar 2017 and Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, was upbeat about the future.
"There is a growing reason to believe that the US market will soon achieve strong economic growth as company expenditure and hiring increase," he said.
The dollar gave up morning gains but held on to most of the previous day’s gains after minutes from the Federal Reserve’s December meeting showed policymakers upbeat about the outlook for the world’s top economy, which could lead to further interest rate hikes.
While analysts said the board was divided over the speed of rises, it was confident Trump’s tax cuts could boost consumer spending.
Eyes are now on the release of US jobs data on Friday.
In early European trade London rose 0.2 percent, Paris jumped 0.6 percent and Frankfurt was 0.7 percent higher.
– Key figures around 0820 GMT –
Tokyo – Nikkei 225: UP 3.3 percent at 23,326.06 (close)
Hong Kong – Hang Seng: UP 0.6 percent at 30,736.48 (close)
Shanghai – Composite: UP 0.5 percent at 3,385.71 (close)
London – FTSE 100: UP 0.2 percent at 7,686.96
Euro/dollar: UP at $1.2027 from $1.2014 at 2200 GMT
Pound/dollar: UP at $1.3523 from $1.3515
Dollar/yen: UP at 112.58 yen from 112.52 yen
Oil – West Texas Intermediate: UP 49 cents at $62.12 per barrel
Oil – Brent North Sea: UP 31 cents at $68.15
New York – DOW: UP 0.4 percent at 24,922.68 (close)