SEOUL, South Korea – Asian markets were mostly higher Monday after the Fed’s pledge not to rush to raise interest rates prompted investors to add risky assets ahead of the year-end holiday. A rise in the price of oil boosted energy stocks.
KEEPING SCORE: China’s Shanghai Composite Index was up 1.6 per cent to 3,158.94. South Korea’s Kospi added 0.7 per cent to 1,943.77 and Hong Kong’s Hang Seng rose 1.5 per cent to 23,452.25. Japan’s Nikkei 225 dipped 0.1 per cent to 17,610.33 while Australia’s S&P/ASX 200 jumped 1.9 per cent to 5,422.00. Stocks in Southeast Asia and Taiwan also rose.
ANALYST’S TAKE: “Our markets have opened firmer after the strong rebound in energy prices,” said Tony Kwok, a sales trader in Sydney for CMC Markets. “Oil futures in particular, jumped 3.3%, despite Saudi Arabia refusing to cut production, which is seen as a very positive sign for the recently battered commodity.”
OIL REBOUND: Saudi Petroleum Minister Ali Naimi said Sunday that he was certain the oil market would recover with the improvement of the global economy. Oil peaked at $107 a barrel in June but has plunged since then due to weak demand, especially after Saudi Arabia and other members of the Organization of Petroleum Exporting Countries agreed to maintain production levels. Naimi, in a speech at an energy summit in Abu Dhabi, denied his government was trying to suppress oil prices.
ENERGY STOCKS: Shares of energy companies, which have underperformed benchmarks, made gains as crude prices rebounded after the Saudi petroleum chief, Naimi, expressed confidence the market would stabilize. State-owned Chinese oil and gas company PetroChina Co. jumped 5.4 per cent while another state-owned energy company, Sinopec Shanghai Petrochemical Co., advanced 3.1 per cent.
FED PLEDGE: Last week’s volatile stock movements found an upward direction after the Federal Reserve reassured investors on Wednesday it was in “no hurry” to hike interest rates and that a rate hike will not take place during the first quarter of next year. The news emboldened investors and the U.S. dollar rose against other major currencies.
ENERGY: Benchmark U.S. crude was up 78 cents to $57.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.77 on Friday to settle at $57.13 a barrel. Brent crude, used to price international oils, rose $2.23 to $62.24 per barrel in London.
CURRENCIES: The dollar was steady at 119.513 yen while the euro rose to $1.254 from $1.2230.