Asia: Markets track global surge on oil deal hopes

[HONG KONG] Energy firms led an Asian stock market rally Wednesday as strong trade data from China and news of a deal between Russia and Saudi Arabia to limit oil output injected much-needed optimism.

The renewed confidence also saw the safe-haven yen retreat against the dollar, having soared more than five per cent since the start of the month.

US and European equities provided a perfect lead with healthy gains, after Russian news agency Interfax said Moscow and Riyadh had reached "consensus" on freezing oil output before a key producers' meeting.

While most market-watchers say nations must actually cut production to have any lasting impact, the news raised hopes that at least a global glut - which saw prices plunge 75 per cent from mid-2014 to February - can be addressed.

Major players from inside and outside the Opec producers' club are due to meet in Doha Sunday to discuss the crude crisis, which has hammered some of the world's biggest energy companies and oil-exporter nations.

The two main oil contracts surged more than four per cent to 2016 highs on the report, although they retreated Wednesday on profit-taking.

Energy firms were the main gainers in Asia. Hong Kong-listed CNOOC and PetroChina put on around six per cent. In Sydney Woodside Petroleum was three per cent higher and Rio Tinto up 4.5 per cent.

Japan's Inpex added 3.9 per cent.

The gains fed through to the wider stock markets, with Tokyo leading the way, soaring 2.8 per cent by the close. Hong Kong was up 2.8 per cent in the afternoon and Sydney ended 1.3 per cent higher.

European markets, which rallied Tuesday, extended gains soon after the open with London 0.9 per cent up, while Frankfurt and Paris each added 1.4 per cent.

The International Monetary Fund's decision to cut its global growth outlook and issue a warning that activity has been "too slow for too long" seemed to have little impact.

"Oil prices have rebounded, and the US market is becoming slightly risk-on," Chihiro Ohta, general manager of investment information at SMBC Nikko Securities in Tokyo, told Bloomberg News.

"With oil prices higher, US financial institutions and energy companies' credit issues can take a breather for now, and stock selling from oil-producing countries can be avoided. Investors are thinking they should buy back into the Japanese stock market as well." Shanghai ended 1.4 per cent higher after official figures showed China's exports surged in March to break an eight-month streak of declines.

The data is the latest to indicate a possible turnaround in the fortunes of the world's number two economy, following upbeat inflation on Monday and a gauge of factory activity last month showing a surprise increase.

"Economic indicators are going in the right direction and there's more evidence that Chinese stimulus measures are positively impacting the economy," said Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors.

Attention now turns to the release Friday of China's first-quarter growth figures, after the economy expanded in 2015 at its slowest rate for a quarter of a century.

On currency markets the dollar pushed back against the yen, seen as a safe refuge in times of turmoil.

The greenback climbed to 108.90 yen, having earlier this week dipped below 108. Support came from a promise by Japan's finance minister that officials would intervene to prevent the yen strengthening too much.

AFP