Energy Firms Lead Asia Markets Higher

Energy firms led a rally in most Asia equities markets on Wednesday (Nov 16) after oil prices soared on hopes for a deal by producers to cut output, while the dollar settled back after its latest gains.

The advance on trading floors is the latest in a volatile week for global markets after Donald Trump’s shock election victory, which has fanned uncertainty for the US and the world economy.

News that the OPEC exporters club and non-member Russia were engaged in a push to agree a deal fuelled a rush back into crude, which has in recent weeks been hit by worries over the chances of a cut as well as a strong dollar.

Both main contracts rallied almost six per cent on Tuesday on renewed hopes OPEC can reach a deal before it holds its twice-yearly meeting at the end of the month.

“With OPEC production at record highs, meaning any cut has to get bigger by the day, any news that this mountain can be climbed by November 30th is seized upon,” Jeffrey Halley, senior market analyst at OANDA, said in a note.

“With fast money flows dominating so many other markets at the moment it is no surprise that it was oil’s turn,” he said, adding: “We can expect more of this intra-day volatility over the next two weeks.”

Brent and West Texas Intermediate extended their gains in Asia Wednesday, providing fresh impetus to regional energy-linked firms.

Among the big winners, Hong Kong-listed CNOOC soared 1.8 per cent, Woodside Petroleum jumped more than two per cent in Sydney and Inpex was three per cent higher in Tokyo.

DOLLAR EYES ¥110

The gains filtered through to broader markets, with most major indexes tracking another record close on Wall Street.

Tokyo jumped 1.1 per cent as another rise in the dollar provided further support for exporters. The greenback surged to ¥109.40 Wednesday afternoon.

Analysts are tipping the dollar to hit the ¥110 range soon as investors bet on a sharper rise in US interest rates after Trump pledged to ramp up spending and cut taxes.

Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp in New York, told Bloomberg News: “The dollar is rallying ahead on expectations for a quicker pace of rate increases next year, putting the ¥110 level by year-end possibly in sight.”

Seoul was up 0.6 per cent. However, Shanghai eased 0.1 per cent, Singapore fell 0.1 per cent and Hong Kong succumbed to a late sell-off to end 0.2 per cent down.

Emerging economy markets – dragged by worries over Trump’s plans for US trade deals – also staged a second day of gains as the volatility fuelled by the tycoon’s election eases.

Manila put on 1.5 per cent, Taipei added 0.4 per cent, Jakarta was 2.2 per cent higher and Kuala Lumpur gained 0.9 per cent, although traders remain on edge.

The rally across Asia follows another advance in New York, where the Dow clocked up its fourth consecutive record high close and the S&P 500 and Nasdaq also surged.

A Commerce Department report showing retail sales solidly up in October also provided support.

In early European trade London added 0.1 per cent, Paris put on 0.2 per cent and Frankfurt was flat.

– Key figures around 0800 GMT –

Tokyo – Nikkei 225: UP 1.1 per cent at 17,862.21 (close)

Hong Kong – Hang Seng: DOWN 0.2 per cent at 22,280.53 (close)

Shanghai – Composite: DOWN 0.1 per cent at 3,205.06 (close)

London – FTSE 100: UP 0.1 per cent at 6,801.41

Euro/dollar: DOWN to US$1.0715 from $1.0725

Dollar/yen: UP at ¥109.40 from ¥109.16

Pound/dollar: UP at US$1.2462 from US$1.2455

Oil – West Texas Intermediate: UP 26 cents at US$46.07 per barrel

Oil – Brent North Sea: UP 28 cents at US$47.23

New York – Dow: UP 0.3 per cent at 18,923.06 (close)

Courtesy : channelnewsasia