Asia rises as dealers follow US, Europe lead
HONG KONG: Most Asian stock markets advanced strongly yesterday, mirroring rallies in Europe and New York as the initial shock from the deadly Paris attacks wore off.
While Friday’s carnage, which left 129 people dead, fuelled fears in the region about the effects on the already troubled European economy, confidence was buoyed by a defiant reaction around the world.
The three main markets on Wall Street each ended sharply higher, while London and Frankfurt also advanced and Paris pared early selling to end only marginally lower.
That filtered through yesterday to Asia’s trading floors, with Tokyo, Hong Kong and Sydney all posting healthy gains. However, Shanghai edged down in late deals after bucking the trend Monday and climbing.
In Europe Paris rose 0.96% at yesterday’s open, while Frankfurt advanced 0.91% and London jumped 1.15%.
“Good gains in overnight US markets should wash across” into Asia, said Tony Farnham, a strategist at Patersons Securities in Sydney. “Initial cautiousness has quickly dissipated.”
Energy firms were big gainers, rising in line with oil prices as it emerged that US-led jets targeted the Islamic State group’s oil operations in retaliation for the Paris horror.
The latest developments renewed the possibility of a rise in the level of conflict in the Syria-Iraq region that some fear could disrupt oil output.
Hong Kong-traded CNOOC surged more than 3%, while Inpex in Tokyo added more than 2%, while JX Holdings jumped 3.4%. Sydney-listed Origin rallied 7.4%.
The euro, which turned down against the dollar and yen Monday, continued to face pressure after a key official at the European Central Bank suggested it would further loosen its monetary policy.
“It’s key for a central bank to keep inflation expectations anchored, especially in a period of slack in the economy, and we have some signals that these inflation expectations are still fragile,” Executive Board member Peter Praet said in a Bloomberg interview in Frankfurt Monday.
His comments come as the euro-zone economy struggles to pick up and prices remain subdued, with a multi-billion-euro bondbuying scheme aimed at boosting lending unable to get traction.
Yesterday the single currency fell to $1.0656, its lowest since April, at one point before edging back marginally.
The yen was also weaker after Monday’s news that Japan had slipped back into recession for the second time in Prime Minister Shinzo Abe’s tenure increased the likelihood the country’s central bank would ramp up its own stimulus.