Asian stocks jumped yesterday after a strong lead from Wall Street and Europe, and as investors adjusted to the prospect of a US rate rise in the near future.
Energy stocks soared in Hong Kong and Sydney as oil prices rebounded, while in Tokyo exporters were lifted by a weaker yen which is a plus for their profitability.
The gains in Asia followed a jump in European markets Tuesday as Brexit fears eased after opinion polls suggested Britain would vote to remain in the European Union next month.
Wall Street stocks also had a good day after Commerce Department figures showed US new-home sales in April surged to their best level since January 2008.
The Fed has repeatedly stated its intention to continue raising interest rates this year after December’s first hike in nine years.
But until recently investors had discounted the possibility of an imminent increase, given the market panic at the beginning of 2016 on concerns of soft global growth.
“Strong US new-home sales have added credence to the Fed’s claims that the US economy may be strong enough for another rate hike in June or July,” Angus Nicholson, a market analyst at IG in Melbourne, said in a commentary.
The markets are now reacting well to the news, analysts said, as a sign the economy is doing better.
“Before, there was a sense that higher rates would spell trouble but the market has had time to digest that,” Bill Schultz, chief investment officer at McQueen, Ball & Associates Inc in Pennsylvania, told Bloomberg News.
“People may be coming around on the idea of a rate hike as an indication of economic strength. Maybe there’s a bit more of an optimistic view, and today we’re rallying through the close.”
Hong Kong added 2.7% by the close, while Taipei, Manila and Jakarta were all up more than 1% and Singapore advanced about 0.9%.
Sydney was lifted 1.5% and Seoul 1.2%, but Shanghai flitted in and out of positive territory to close 0.23% lower.
Tokyo ended up 1.6% as the dollar advanced against the Japanese currency.
A weaker yen inflates the value of exporters’ overseas profits.
The greenback was at 110.27, up from ¥109.99 in New York and ¥109.22 in Tokyo on Tuesday on mounting expectations of a US interest rate increase. Energy stocks were among the best performers regionally, as oil prices edged towards $50 a barrel in Asia after a larger-than-expected dip in US stockpiles resulting from wildfires in Canada.
US benchmark West Texas Intermediate was up 78 cents to $49.40 a barrel in the afternoon, a new seven-month high, and Brent crude was trading 72 cents higher at $49.33 a barrel.
Hong Kong-listed China Shenhua Energy soared 6.1%, CNOOC advanced 3.6 % and PetroChina was up 3.9%.
In Sydney, WorleyParsons closed 7.6% higher and Santos gained 2.6%, while in Tokyo, explorer Inpex gained 1.1%.
Also in Tokyo, automaker Toyota climbed 2.3% following overnight news of a partnership with ridesharing titan Uber, and consumer electronics giant Sony increased more than 6% after investors shrugged off a weak profit forecast.
Elsewhere, eurozone finance ministers reached a vital deal with Greece yesterday to start debt relief as demanded by the International Monetary Fund, and to unlock €10.3bn ($12bn) in bailout cash.
In early European trade London climbed 0.6%, Paris added 0.6% and Frankfurt put on 0.9%.
In Tokyo, the Nikkei 225 up 1.6% at 16,757.35 points; Shanghai - Composite down 0.23% at 2,815.09 points and Hong Kong - Hang Seng up 2.7% at 20,368.05 points at the close yesterday.