Asia Markets

Asia markets close higher; energy stocks rise as oil holds onto most gains

Key Points
  • Major indexes in Asia climbed, with the Nikkei 225 leading gains in the region
  • Energy stocks in the region rose
  • Oil prices were a tad softer after touching their highest levels since July 2015 on Monday
  • China Evergrande stock soared following news of share sale
  • The Reserve Bank of Australia held rates steady

Major indexes in Asia closed higher on Tuesday after U.S. stocks closed at record levels and oil prices traded at their highest marks since 2015 overnight.

Amid that backdrop, investors also watched for headlines as President Donald Trump's tour of Asia continued, with the president arriving in South Korea on Tuesday following his two-day visit to Japan.

Markets on the move

Japan's Nikkei 225 jumped 1.73 percent, or 389.25 points, to end at 22,937.60, its highest close in 26 years. Energy-related stocks rose following the surge in oil prices in the last session: Inpex closed up 3.65 percent and Japan Petroleum Exploration rose 6.02 percent. Brokerages and tech names also recorded gains.

Across the Korean Strait, the Kospi finished the session off 0.16 percent at 2,545.44 despite gains in energy names and retailers: Petroleum refiner SK Innovation closed up 0.94 percent and Shinsegae jumped 8.35 percent. Tech names were mixed, with blue chip SK Hynix falling 1.32 percent and Samsung Electronics closing down 0.5 percent.

Down Under, the S&P/ASX 200 rose 1.02 percent to close at 6,014.30, the first time the index has crossed the 6,000 mark since 2008. The energy sub-index climbed 2.7 percent to lead gains on the broader index: Santos closed up 3.7 percent and Beach Energy tacked on 6.42 percent. Resource plays also climbed on the back of gains in iron ore and base metals in the last session. Rio Tinto ended the session 2.06 percent higher, Fortescue Metals gained 4.79 percent and Gindalbie Metals soared 8.33 percent on the day.

Hong Kong's tacked on 1.33 percent by 3:00 p.m. HK/SIN. On the mainland, the edged up 0.8 percent to close at 3,415.14 and the Shenzhen Composite ended the day 0.67 percent higher at 2,012.72. As with the rest of the region, oil stocks in greater China markets also recorded gains: shares of CNOOC and Sinopec traded in Hong Kong rose 1.45 percent and 3.66 percent by 3:03 p.m. HK/SIN.

U.S. stocks closed at record levels in the last session as investors focused on Broadcom's unsolicited bid to buy Qualcomm for $103 billion. If that goes through, it would be the largest tech deal in history. The Dow Jones industrial average closed up 0.04 percent for an all-time high of 23,548.42.

The lead up

Moves in the oil markets were front and center after prices surged to their highest levels since July 2015 on Monday. That rise followed a political crackdown in Saudi Arabia that began during the weekend. A supposed anti-corruption crackdown resulted in the arrests of billionaire investor Prince Alwaleed bin Talal and other prominent royals, but it is seen by many analysts as a move by Saudi Crown Prince Mohammed bin Salman to consolidate his power.

Oil was little changed on Tuesday after settling higher by some 3 percent in the last session. U.S. West Texas Intermediate crude shed 0.09 percent to trade at $57.30 a barrel and Brent crude futures lost 0.06 percent to trade at $64.23.

Tensions in the region will need to be monitored going forward, cautioned Philip Wee, a strategist at DBS Bank. Volatility indices stateside, which touched their lowest levels this year last week, are unlikely to remain low "if crude oil prices continue to push higher quickly," he added.

The Reserve Bank of Australia on Tuesday kept interest rates steady. In his statement, RBA Governor Philip Lowe cautioned that inflation remained low, but also noted that the bank expected the metric to "pick up gradually as the economy strengthen[ed]."

The Australian dollar traded at $0.7673 at 2:53 p.m. HK/SIN, a touch softer on the day, although the currency had touched a high of $0.7700 following the news from the central bank.

Elsewhere, William Dudley, the president of the Federal Reserve Bank of New York, will step down mid-2018. Dudley has been at the helm of the bank since 2009.

Corporate news 

China Evergrande Group will raise 60 billion yuan ($9.04 billion) from selling shares in subsidiary Hengda Real Estate before a planned backdoor listing of the unit on the Shenzhen Exchange. Evergrande shares jumped 10.62 percent by 2:53 p.m. HK/SIN.

Chinese cybersecurity company Qihoo 360 Technology said Monday that "national interest" was one factor for its decision to delist in the U.S. and move to China, Reuters said. Qihoo 360 CEO Zhou Hongyi told the media that cybersecurity companies that were "big enough" had to be "aligned with national interests," Reuters reported.

Also of note, Samsung's appeal over a patent lawsuit was rejected by the U.S. Supreme Court on Monday. Apple had been awarded $120 million over patent infringement in a 2016 ruling on the lawsuit, Reuters reported.

Watching the dollar 

Commodity-linked currencies were in focus after they climbed following the rise in oil prices overnight. The Canadian dollar pared some of its gains made in the last session to trade at $1.2719 to the dollar at 2:52 p.m. HK/SIN after trading as high as $1.2699 earlier.

The greenback was little changed against a basket of currencies, with the dollar index trading at 94.787 after climbing as high as 95.077 in the Monday session. The dollar also strengthened against the Japanese yen, last trading at 114.12, against Monday's close of 113.71.