HONG KONG (AFP) – Asian markets extended their rally Tuesday as hopes were raised major oil exporters could agree action to ease the supply glut, and authorities will step in to boost growth in major economies.
Gains on European markets also gave investors confidence to buy again as Shanghai surged more than three per cent on speculation China is preparing stimulus measures to boost the world’s number two economy.
Chinese stocks were also given a lift by official figures showing bank lending surged to a record high in January, as credit gushed to help boost the flagging economy.
Analysts expect further monetary loosening after six interest rate cuts in the 12 months to November and several cuts in the amount of funds banks keep in reserve.
“Looking ahead, we expect credit growth to remain strong given that the PBoC has kept monetary conditions loose,” Julian Evans-Pritchard, China economist at Capital Economics, said in a research note.
A pedestrian walks past a stock markets indicator board in Tokyo – EPA
Energy firms were among the big winners, tracking a second successive rally in crude prices, which came after Bloomberg News said Saudi Arabia’s oil minister plans to hold talks with his Russian counterpart in Doha on Tuesday.
The news is a much-needed positive for the oil market, which has been buffeted by a global supply glut, overproduction, weak demand, a slowdown in the world economy and a strong dollar.
Saudi Arabia has insisted that it will not cut production to tackle a global glut unless major producers outside the 13-nation Organization of Petroleum Exporting Countries – including Russia – co-operate.
“These are still very early days and nothing concrete has been agreed, but there is a growing sense that countries could be more flexible, although Riyadh would insist that everyone else contribute to the cut,” Amrita Sen, chief oil analyst at Energy Aspects Ltd in London, said.
Prices last week touched a near 13-year low but sprang back more than 10 per cent Friday as rumours of the talks emerged. They extended those gains Monday and on Tuesday US benchmark West Texas Intermediate rose more than five per cent back above $31 a barrel, while Brent also added more than five per cent to rise to more than $35.
Energy firms soared. PetroChina in Hong Kong jumped 6.6 per cent while CNOOC gained more than three per cent. Sydney-listed mining giant Rio Tinto was 2.3 per cent up and Woodside Petroleum 5.7 per cent up.
The advance helped inject some life into regional stock markets after a booming day in Europe, where London jumped two per cent, and Paris and Frankfurt soared around three per cent. Wall Street was closed for a public holiday.
Shanghai led the way, finishing up 3.3 per cent, while Hong Kong added 1.2 per cent in late trade. The gains come as speculation intensifies that Beijing is preparing further stimulus after data Monday showed a slide in exports and imports.
Currency traders are also pulling back from bets on a devaluation of the yuan as China strengthens support for its currency and prospects for a US interest rate increase dim.
In Tokyo rose 0.2 per cent after soaring more than seven per cent Monday on talk of fresh Bank of Japan easing measures.
The growing confidence saw dealers leave safe investments such as the yen, boosting exporters, while a near 16 per cent surge in mobile giant SoftBank also helped as it kicked off a multi-billion-dollar share buyback.
“Japanese markets have been swung around by outside factors, but those factors are becoming more positive,” Toshihiko Matsuno, chief strategist at SMBC Friend Securities, told Bloomberg News.
“But still, volatility is very high and market sentiment is fluctuating. It is too early to say we have seen the bottom.”
The dollar bought 114.38 yen in afternoon trading, slightly off 114.60 yen in London but well up from Friday’s 113.25 yen.
Sydney ended 1.4 per cent higher, Seoul added 1.4 per cent and Singapore was up 1.86 per cent late on.
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