Asian markets rally as energy firms track oil surge

[HONG KONG] Asian markets enjoyed another day of gains Thursday as energy firms tracked a surge in oil prices, while fears over Syria and a possible China-US trade war eased.

Fresh hopes that US President Donald Trump and North Korea's leader Kim Jong Un will hold a historic summit within months also provided some much-needed optimism.

Both main crude futures rallied almost 3 per cent on Wednesday on the back of data showing a drop in US stockpiles - indicating improved demand - and expectations that a Russia-Opec output cap deal will be kept in place.

Adding to the gains was talk that Opec kingpin Saudi Arabia wanted to see crude at around US$80 a barrel as it prepares for a gigantic listing of part of its state oil company. Tensions in the oil-rich Middle East are also keeping prices elevated.

Brent and WTI, which are now sitting at levels not seen since the end of 2014, edged up further in Asia and analysts say they could continue to rise.

Energy firms across Asia were boosted, with Hong Kong-listed PetroChina up almost 5 per cent and CNOOC 3 per cent higher. Woodside Petroleum added 1.8 per cent in Sydney and Inpex put on 0.4 per cent in Tokyo.

In broader markets, Tokyo ended the morning 0.6 per cent higher, while Hong Kong and Singapore each gained more than 1 per cent. Shanghai added 0.8 per cent, Sydney climbed 0.5 per cent and Seoul put on 0.3 per cent.

Taipei, Wellington and Jakarta were also higher.

The positive trading environment is a far cry from the unease felt at the start of the week after US-led strikes on Syrian targets - in response to an alleged chemical attack - sparked worries of a confrontation with Russia, which is an ally of the Damascus regime.

However, reports have suggested Russian President Vladimir Putin is looking to ease tensions as he faces fresh sanctions.

China's announcement of a timetable to remove restrictions on foreign ownership in its car market, the world's biggest, also lifted optimism that a simmering trade war with the United States can be avoided.

Tough rules on doing business in the country's car sector had been a major source of anger for Mr Trump, who has already threatened tariffs on billions of dollars of Chinese imports in recent weeks as part of his "America First" protectionist agenda.

However, in its quarterly report on the US economy, the Federal Reserve warned there were concerns about the trade tensions among businesses and farmers, who had seen prices rise already.

The central bank's Beige Book report said the world's top economy continued to see moderate growth and it expected to lift interest rates twice more this year, having already hiked in March.

"The biggest dynamic in the market right now is the growth story," Sandip Bhagat, chief investment officer at Whittier Trust, told Bloomberg TV.

"We're in the midst of a synchronised global recovery in growth and corporate profits are rising," he added. Trade wars, tariffs and inflation worries are just "distractions".

On currency markets, the pound struggled to bounce back against the dollar after diving from post-Brexit vote highs on data showing a surprise drop in British inflation.

And the upbeat sentiment across markets has provided support to the greenback against the safe haven yen.

AFP