Asia: Most markets up in cautious trade

[HONG KONG] The volatility that has characterised the start of the year extended another session Friday, with most markets rebounding from another sell-off but with investors remaining on edge.

Buying supported a surge on Wall Street, which followed a rally in oil prices, upbeat earnings reports and comments from a key Federal Reserve official suggesting it could hold off another interest rate rise.

In Sydney, miner BHP Billiton scored healthy gains despite saying it would book a multi-billion-dollar loss and cut its rig count as the plunge in crude prices hammered its US shale gas operations.

Global markets have seen trillions of dollars wiped off valuations since the start of the year, hit by slumping oil prices as well as worries about a growth slowdown in China, and Beijing's bungled handling of the crisis.

However the past week has been less gruelling that last week, when China's decision to weaken the yuan's dollar value several times sent markets into freefall.

Friday saw most regional bourses tick cautiously higher, with Tokyo up 0.7 per cent, Sydney adding 0.1 per cent and Seoul adding 0.2 per cent. There were also gains in Singapore, Wellington and Taipei.

Hong Kong, however, slipped 0.5 per cent. Shanghai was 1.2 per cent lower after a near two percent gain Thursday with speculation that government cash was used to support key state-backed companies.

"Asian markets look set for a bounce today, but its sustainability is still an open question," Angus Nicholson, a Melbourne-based market analyst at IG, said in an email to clients.

"The big unknown today is whether we have seen a sustainable bounce in Chinese equities and whether yesterday's gains can be held onto," Nicholson added.

"Some sense of stability does seem to have been wrestled into the Chinese yuan this week, but the Chinese equity markets have been more immune to muscular shows of state intervention." US dealers opened the door to a bright trading day, with all three Wall Street indexes ending sharply higher.

Traders took heart after James Bullard, head of the Federal Reserve's St. Louis Branch - considered in favour of more rate hikes - suggesting the bank might be cautious about additional rises in light of the latest market turmoil.

A recovery in oil prices also boosted sentiment in New York, with both contracts for the black gold having fallen below US$30 a barrel this week for the first time in 12 years.

However, while crude shifted back above US$31 Thursday, it resumed its downtrend in Asia with West Texas Intermediate down 1.1 per cent and Brent off 0.4 per cent. Oil has dived by three quarters in the past 18 months owing to weak demand, a slowing global economy and a supply glut.

The retreat in crude battered Anglo-Australian mining giant BHP, which said Friday it expects to post a US$7.2 billion pre-tax writedown, adding that it will further reduce the number of onshore US rigs.

Chief executive Andrew Mackenzie blamed "significant volatility and much weaker" prices in the oil and gas industry, adding that the company had been forced to reduce its medium- and long-term price assumptions.

However, the firm's stock price still climbed 2.3 percent Friday, although it has taken a hit in recent months from the ongoing drop in commodity prices.

AFP