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Asia: Markets track global rally as oil climbs
[HONG KONG] Asian stocks joined a global rally Thursday with a surge in oil prices providing some much-needed confidence as key producer Iran praised an output freeze by Saudi Arabia and Russia.
Crude, which last week flirted with 13-year lows, extended a surge that began Friday as dealers grow hopeful of an easing to the overproduction and supply glut that has hammered the commodity for a year and a half.
A pick-up in Chinese inflation also provided support to beleaguered markets, while minutes from the Federal Reserve's latest policy meeting indicated the bank is unlikely to press on with further interest rate cuts any time soon.
Oil prices jumped Wednesday after Iranian oil minister Bijan Zanganeh welcomed the pact between top two producers Russia and Saudi Arabia to pursue a coordinated strategy to limit output.
While he stopped short of committing Iran to any production curbs, his comments were taken as a step in the right direction.
On Wednesday, US benchmark West Texas Intermediate soared more than seven per cent while Brent added 5.6 per cent. And on Thursday, WTI added 1.6 per cent while Brent was one per cent higher.
The black gold has rocketed since Friday when rumours of the Saudi-Russia deal emerged.
"The risk of continued supply growth and potential ballooning of inventories is diminishing slightly," Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group in Sydney, told Bloomberg News.
Energy firms were pumped up in Asia, with Sydney-listed Woodside Petroleum up more than three per cent, BHP Billiton almost six per cent higher while CNOOC was 6.5 per cent higher in Hong Kong and PetroChina added five per cent.
On broader stock markets, Tokyo rose 2.5 per cent by the break, Hong Kong jumped 2.2 per cent, Sydney added 1.9 per cent and Seoul was one per cent higher.
Shanghai gained 0.4 per cent, adding to a more-than-four-per cent jump in the previous two sessions fuelled by hopes for economy-boosting measures by China's government.
Data showing inflation hit 1.8 per cent last month - its highest since August - provided hope a slowdown in the world's number two economy may be easing, although analysts warned against being too optimistic with many structural problems still in place.
US and European stocks provided a firm platform from their Asian counterparts, with the Fed minutes also tempering concerns about any possible tightening this year.
The minutes showed policymakers were worried about the impact of recent world market gyrations on the US economy and that they would closely follow events when deciding on whether to hike rates again.
The string of upbeat news led analysts to suggest the turmoil that has blown through trading floors from Asia to the Americas may be coming to an end.
"The Fed minutes show that it does look like they're gearing up for a slower rate hike path, which is good" for higher-risk assets, Nader Naeimi, Sydney-based head of dynamic markets at AMP Capital Investors, said.
"I think this rally has further to go, with the conditions set for the rebound to continue for a little while."