Asia trades higher, Singapore shares open up 0.9%

Asia trades higher, Singapore shares open up 0.9%

Asian stocks opened higher on Monday, after selling off last week, with all eyes on China's open after a week-long holiday.

Singapore's Straits Times Index opened 0.9 per cent higher on Monday, rising 22.82 points to 2,562.77 as of 9am, The Business Times reported.

The Nikkei 225 retraced losses from last Friday to trade up 4.2 per cent, and the Topix surged 5 per cent in early trade. The benchmark index had lost as much as 12.88 per cent between February 1-12.

Across the Korean Strait, the Kospi was up 1.10 per cent.

Down Under, the S&P/ASX 200 was up 1.41 per cent in early trade, before retracing some gains to trade 0.8 per cent higher. The index was buoyed by gains in the materials sector, which was up by 3.79 per cent, and the energy sector, which gained 1.76 per cent.

With the mainland Chinese markets returning to trade after a week off for the Lunar New Year holidays, analysts believe China may be positively influenced by the rally on Friday in US and European markets.

Evan Lucas, a market strategist at spreadbetter IG, said in a morning note the People's Bank of China (PBOC) governor's comments on the yuan would also help keep trade positive.

Over the weekend, Zhou Xiaochuan told Caixin financial magazine that he saw no basis for a continuing the depreciation of the yuan, which is also known as the renminbi. He also dismissed speculation that Beijing would tighten capital controls to stem the surging capital outflows from the mainland.

Banking stocks across the region traded mostly higher, following the gains for US and European banks on Friday.

Australia's so-called Big Four banks - ANZ, Commonwealth Bank of Australia, Westpac, and NAB - traded up between 0.40 and 2.07 per cent.

Japanese banks, which have seen heavy sell-off since the Bank of Japan's surprise decision to introduce negative interest rates toward the end of January, rallied with Mitsubishi UFJ up 6.74 per cent, SMFG gaining 6.77 per cent, Mizuho Financial up 6.06 per cent, and Nomura up 7.64 per cent.

Brokerages in South Korea were also up between 1.47 and 7.37 per cent, with Samsung Securities up 2.46 per cent and Daewoo Securities gaining 2.07 per cent.

Japanese stocks rallied across the board after Kozo Yamamoto, a key Abe ally, suggested on Friday that Prime Minister Shinzo Abe needed to hold an emergency economic summit to discuss measures to address a global growth slowdown as well as market turbulence.

"An emergency meeting will be a positive," said Lucas. "even if it's for the wrong reasons and this remains a 'watch this space' moment."

Major exporters such as Toyota, Nissan, and Honda gained between 5.10 and 5.73 per cent on the back of a stronger dollar-yen pair, which was up 0.29 per cent at 113.51. Last week, it fell as low as the 111-mark. A weaker yen is a positive for exporters as this increases their overseas revenue when converted into local currency.

Japan's economy, however, contracted at an annualized rate of 1.4 per cent in the quarter from October through December, hurt by weak private consumption and housing according to official data.

Reuters reported that the preliminary figure for GDP was higher than what the market expected - a Reuters poll had estimated a 1.2 per cent contraction. In the July-September period, Japan's revised GDP numbers showed a 1.3 per cent gain.

Lucas said other positive influences in Asian trade would be the bounce in oil on Friday, following comments from the UAE's energy minister. He said OPEC was willing to co-operate on an output cut, according to the Wall Street Journal, and added that cheap oil was forcing supply reductions that would help rebalance the market.

US benchmark West Texas Intermediate (WTI) futures settled up $3.23, or 12.32 per cent, at $29.44 a barrel during US hours while Brentwas up $2.81, or 9.35 per cent, at $32.89 a barrel. But oil prices still remain depressed and volatile.

This followers a higher finish on Wall Street on Friday. The Dow Jones industrial average closed up 313.66 points, or 2 per cent, at 15,973.84. The S&P 500 ended up 35.70 points higher, or 1.95 per cent, at 1,864.78 and the Nasdaq composite gained 70.67 points, or 1.66 per cent, to close at 4,337.51.

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