Asian shares rise, taking cue from Wall Street

Asian share markets rose to five-month highs on Tuesday, taking their cue from gains on Wall Street after a strike in Kuwait helped pull crude oil prices above their prior-session lows.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.7 per cent, after touching its highest intraday levels since November. The Dow Jones industrial average climbed to its highest level since July overnight. Japan’s Nikkei stock index was up 3.5 per cent in early trading, a day after it fell 3.4 per cent as investors assessed the impact of earthquakes in southwestern Japan’s Kyushu on manufacturers’ supply chains.

“The effects of the Dow reaching a nine-month high created a buying trend that helped lift the Nikkei today,” said Hiroki Allen, chief representative of Superfund Securities Japan in Tokyo. The Korea Composite Stock Price Index (KOSPI) was up 0.1 per cent after the Bank of Korea kept rates unchanged as expected. Brazil’s Bovespa index fell 0.6 per cent on Monday as President Dilma Rousseff vowed to fight her impeachment, which could force her from office after 13 years of leftist Workers’ Party rule.

Beleaguered crude oil futures turned lower in Asian trade but remained well off lows plumbed in the previous session after weekend talks failed in Doha, where producers had hoped to curb a supply glut. A strike in Kuwait temporarily slashed the country’s oil output by more than half, and helped pull crude prices off their lows. Kuwaiti officials said they expect to counter the open-ended strike by using crude from inventory and by taking legal action against unions. Brent crude was down about 0.7 per cent at $42.63 a barrel, while US crude fell about 0.4 per cent to $39.65.

Commodity-linked currencies pared their steep losses logged after the Doha deal breakdown. The Australian dollar was last up 0.3 per cent at $0.7768 after earlier rising as high as $0.7784, its highest since June. On Monday, it had skidded as low as $0.7594. In minutes of its April 5 policy meeting, Australia’s central bank cautioned that a rising Aussie could tilt the economy off balance. The perceived safe-haven yen slumped in line with the recovery in risk appetite. The dollar added 0.2 per cent to 109.05 yen, while the euro added 0.3 per cent to 123.47 yen, moving away from the previous session’s three-year low.

Against the dollar, the euro edged up about 0.1 per cent to $1.1322, as investors looked ahead to the European Central Bank’s policy meeting on Thursday. While no change is expected, investors are awaiting Mario Draghi’s news conference for clues on the central bank’s thinking. The US Federal Reserve will meet next week, and is also expected to hold pat on policy, though any suggestion that more hikes are on the way sooner rather than later would lift the greenback. New York Fed President William Dudley said in a speech on Monday that economic conditions are “mostly favourable” yet the central bank remains cautious in raising interest rates because threats loom.

For the second time in as many weeks, Boston Fed President Eric Rosengren warned on Monday that futures markets, which see only one modest rate hike in each of the next few years, are off the mark.

Reuters