Japan leads Asia stocks higher, oil halts gains as dollar sags
Asian stocks rose on Tuesday, led by a rebound in Japanese shares as investors hunted for bargains, and commodities like crude oil strengthened as the weaker U.S. dollar made them cheaper for buyers using currencies other than the greenback.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent.
Japan’s Nikkei which fell to two-month lows on Friday, pared earlier losses and gained more than 1 percent on bargain hunting in beaten-down shares such as banking stocks.
Still, the bullish yen remained a concern for Japanese equities. “Investors are frustrated about the lack of effective measures against the strong yen,” said Hikaru Sato, senior technical analyst at Daiwa Securities in Tokyo.
“Confidence in Japanese stocks has waned since the end of last year and it still hasn’t recovered.”
European stocks were seen opening slightly lower, with weak-looking results from Alcoa potentially weighing on mining stocks.
Australian shares climbed 0.9 percent, supported by firm commodities. South Korea’s Kospi .KS11 added 0.5 percent. Volatile Shanghai stocks .SSEC bucked the trend and lost 0.5 percent.
Despite the gains made on Tuesday, wariness over the U.S. earnings season was expected to cap risk assets this week. Metals company Alcoa (AA.N) on Monday reported a lower quarterly profit, with results hurt by factors like low commodity prices.
Oil halted gains above $40 a barrel before U.S. government data forecast to show crude stockpiles expanded ahead of talks between major suppliers about freezing output.
Futures slid as much as 0.7 percent in New York after increasing 8.3 percent in the previous two sessions. Inventories probably rose by 1 million barrels last week, according to a Bloomberg survey before a report from the Energy Information Administration Wednesday. That would keep supplies near the highest level since 1930. The April 17 meeting in Doha will do little to boost prices, and may even cause them to fall, Goldman Sachs Group Inc. said.
“While there is a steady rebalancing underway, oil does look like it’s getting a bit ahead of itself and the underlying fundamentals really don’t warrant a $40 price,” Angus Nicholson, an analyst at IG Ltd. in Melbourne, said by phone. “The market is showing a lot of cautious optimism that some sort of deal might be agreed.”
Equity gauges are mostly firmer as risk appetite is supported by steadier oil prices, a weaker Japanese yen and a stoic response to an uninspiring start to the US earnings season.
The positive tone is undermining government bonds, nudging yields higher and pushing gold down $1 to $1,256 an ounce.
The pan-European Stoxx 600 is dipping 0.2 per cent after the FTSE Asia Pacific index rose 0.9 per cent and US futures suggest the S&P 500 will add 3 points to 2,045.
The aluminium producer is the first high-profile company to report on what is expected to be a poor quarter for US profits, with S&P 500 constituents in aggregate reporting an 8.3 per cent decline in earnings per share compared to the same period in 2015, according to S&P Global market Intelligence.
Some investors are hoping that analysts are so pessimistic about profit prospects that the stock market can be lifted by many companies beating expectations.
Elsewhere in Asia, China’s Shanghai Composite equity index was an underperformer with a loss of 0.3 per cent, partly the result of weakness in property stocks as concerns about the health of the real estate sector lingered.
Australia’s S&P/ASX 200 rose 0.9 per cent higher in spite of a number of stocks in the food sector being hit hard by reports of a China crackdown on overseas imports of food and consumer goods.
There was better news for the Australian dollar, up 0.5 per cent against its US counterpart at US$0.7628 and on track for its third straight daily gain after a survey from National Australia Bank showed business conditions and confidence rebounded in March. The business conditions survey rose 4 points to 12 last month — the highest reading since October 2014.