Asia’s main indexes began the week on the front foot with energy stocks leading the way after oil prices jumped on a surprise production cut by OPEC+.
But the kickback from that output drop is the potentially ominous impact on global inflation just days after a slowdown in US price data had boosted market optimism.
Japanese stocks, though, still closed higher, tracking Wall Street’s strength at the end of last week and underpinned by the boost to its energy outfits.
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The Nikkei share average rose 0.52%, or 146.67 points, to close at 28,188.15, while the broader Topix gained 0.71%, or 14.18 points, to 2,017.68.
Wall Street rallied more than 1% on Friday and the Nasdaq notched its biggest quarterly percentage gain since June 2020, as signs of cooling inflation bolstered hopes that the Federal Reserve might soon end its aggressive interest rate hikes.
In Japan, energy explorers jumped 4.97% to lead gains in the Tokyo Stock Exchange’s 33 industry sub-indexes.
Oil prices climbed about $5 a barrel, jolted by a surprise announcement by OPEC+ to cut production further in an effort to support market stability. Oil refiners advanced 3.67%.
The Nikkei’s recent rally comes after last month’s declines when investors hedged against risks of a possible global financial crisis.
Tech Firms Lift China Stocks
Property developers and technology firms lifted China stocks, while Hong Kong shares edged ahead, despite the worries over inflation after the surprise output cuts by Saudi Arabia and other OPEC+ oil producers.
Real estate developers gained 2.4% and financials shares added 1.5% after a private survey showed prices of new homes in 100 Chinese cities rose at the fastest pace in nine months in March, as government support measures helped accelerate demand in large- and mid-sized cities.
Information technology and media shares surged more than 3% each to outperform other sectors, amid a frenzied tech and media shares rally, driven by the launch of Microsoft’s ChatGPT.
Separately, China’s factory activity growth stalled in March, weighed by slowing production and weaker global demand, adding to uncertainty about a post-Covid recovery, a private sector survey showed on Monday.
Hong Kong’s Hang Seng Index edged up 0.04%, or 9.07 points, to 20,409.18.
The Shanghai Composite Index rose 0.72%, or 23.54 points, to 3,296.40, while the Shenzhen Composite Index on China’s second exchange advanced 1.14%, or 24.27 points, to 2,149.02.
Elsewhere across the region, Indian stocks advanced with Mumbai’s signature Nifty 50 index up 0.02%, or 4.25 points, at 17,364.00.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4%.
Core US Inflation Reading Lift
Oil prices surged after Saudi Arabia and other OPEC+ producers announced a shock round of output cuts. Brent oil futures jumped $3.94 to $83.83 a barrel on news output would be cut by around 1.16 million barrels per day. US crude climbed $3.84 to $79.51, but was off its early peak of $81.69.
The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia.
The surge in energy costs somewhat overshadowed Friday’s slower reading for core US inflation, which had seen Wall Street end the month on a strong note.
S&P 500 futures dipped 0.3% on Monday, while Nasdaq futures lost 0.6%. EUROSTOXX 50 futures eased 0.1%, while FTSE futures added 0.1%.
The jolt to inflation expectations saw yields on US two-year Treasuries rise 4 basis points to 4.11%, while Fed fund futures pared back expectations for rate cuts later in the year.
The outlook for US interest rates could be impacted by data on ISM manufacturing and payrolls out this week, though the reaction to the coming Friday’s jobs report will be muted by the Easter holidays.
Central banks in Australia and New Zealand hold policy meetings this week, with the latter expected to hike by another quarter point to 5.0%.
Markets are wagering the Reserve Bank of Australia will pause its tightening campaign after 10 straight rises, though analysts are more divided on whether it might still hike.
Key figures
Tokyo – Nikkei 225 > UP 0.52% at 28,188.15 (close)
Hong Kong – Hang Seng Index > UP 0.04% at 20,409.18 (close)
Shanghai – Composite > UP 0.72% at 3,296.40 (close)
London – FTSE 100 > UP 0.71% at 7,685.68 (0934 GMT)
New York – Dow > UP 1.26% at 33,274.15 (Friday close)
- Reuters with additional editing by Sean O’Meara
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