HONG KONG – Asian stocks rose for a second day Tuesday as rising hopes for more central bank stimulus and a jump in crude oil prices gave investors relief from the mauling that markets have suffered so far this year.
KEEPING SCORE: Japan’s benchmark Nikkei 225 index climbed 0.9 per cent to 16,166.84 after soaring 7.2 per cent the day before, which was its biggest daily gain since September. South Korea’s Kospi rose 1.4 per cent to 1,889.48 and Hong Kong’s Hang Seng advanced 1.6 per cent to 19,230.47. The Shanghai Composite Index in mainland China gained 2.6 per cent to 2,816.32 and Australia’s S&P/ASX 200 was up 0.3 per cent to 4,859.40. Benchmarks in Taiwan and Southeast Asia also rose.
STIMULUS HOPES: With U.S. markets closed for a holiday and therefore providing no guidance in either direction, the global stock rally extended into a second day. Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank. With the ECB set to discuss policy measures on March 10, Mario Draghi told the European Parliament on Monday that the bank has a range of instruments it can deploy if it decides more stimulus is needed. Earlier, a disappointing report on Japanese economic growth also raised hopes for more policy easing.
ANALYST’S TAKE: “The key question is whether markets have reached a turning point, or is this merely a pause in a period of value destruction,” said Michael McCarthy, chief analyst at CMC Markets in Sydney. “Company reports in the U.S. and Australia are broadly supportive, but trade and growth data from Japan and China released yesterday was worse than expected. On the positive side, the ECB appears set to ramp up support following President Draghi’s comments overnight.”
ENERGY: Oil futures bounced higher, with benchmark U.S. crude rising $1.22, or 4 per cent, to $30.67 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.23 to settle at $29.44 a barrel on Friday. Brent crude, a benchmark for international oils, added $1.11 to $34.50 a barrel in London.
EUROPE JUMP: Britain’s FTSE 100 closed 2 per cent higher on Monday at 5,824.28 and Germany’s DAX gained 2.7 per cent to 9,206.84. France’s CAC 40 rose 3 per cent to close at 4,115.25.
CURRENCIES: The dollar strengthened to 114.70 yen from 114.54 yen in Monday’s trading. The euro slipped to $1.1161 from $1.1167.