Asian markets open higher following 2% jump in oil prices; dollar softer

Asian markets open higher following 2% jump in oil prices; dollar softer
PHOTO: Pixabay

Asian markets opened higher in early Tuesday trade, following the bounce in oil prices after the energy ministers of Russia and Saudi Arabia announced output cuts should be extended till March 2018 and shrugged off US political news on President Donald Trump.

US West Texas Intermediate crude jumped more than 3 per cent during the session yesterday following the news. Saudi Arabia and Russia are the world's largest producers of oil.

US crude gained 0.37 per cent to trade at US$49.02 (S$69) a barrel while Brent crude added 0.31 per cent to trade at US$51.98.

The Nikkei 225 gained 0.5 per cent. In an exclusive interview with CNBC, Japanese Prime Minister Shinzo Abe said Monday that his country would continue pushing for a trans-Pacific trade deal, but he hoped the US would rejoin the pact.

Thee Kospi bounced 0.64 per cent in early trade on Tuesday.

Australia's S&P/ASX 200 added 0.31 per cent, due largely to gains in its materials sub-index, which was up 0.86 per cent.

Investors were also focused on a Washington Post report that Trump divulged highly classified information during his meeting with Russian officials last week.

Officials told the Post that the information was incredibly sensitive and that its exposure endangers the relationship with an ally, which had not approved sharing the information with Russia. This ally, officials told the Post, "has access to the inner workings of the Islamic State."

The White House through National Security Adviser H.R. McMaster later denied the report. "At no time were any intelligence sources or methods discussed and no military operations were disclosed that were not already known publicly."

The dollar index, which measures the dollar against a basket of foreign currencies, sank to trade at 98.883. It had traded at levels around the 99 handle last week.

This was due to strength in the euro, which rose for a third consecutive session to trade at US$1.098. The greenback gained against the yen after three straight sessions of losses, last trading at 113.66.

Meanwhile, the Aussie strengthened against the dollar to trade at US$0.7424. The Aussie had touched a near four-month low last week due to weaker commodity prices. The New Zealand dollar also climbed against the dollar, last trading at US$0.6891.

Prices of other commodities, including copper and aluminium, tracked the moves in oil, National Australia Bank Currency Strategist Rodrigo Catril said in note, adding that this "helped commodity-linked currencies outperform." He added that the Kiwi and Aussie had given up some gains as oil prices eased overnight.

In economic news, minutes of the Reserve Bank of Australia's (RBA) May meeting are expected at 9:30 am HK/SIN. A deluge of data from Europe is also expected during the European trading day, with the UK reporting CPI and PPI figures and Europe releasing Q1 GDP data at 4:30 pm and 5:00 pm respectively.

Over in the US, equities rose more than 0.4 per cent across the board, with energy stocks contributing to the gains. The S&P 500 finished the session 0.48 per cent higher while gains in tech and cybersecurity stocks caused the Nasdaq to rise 0.46 per cent.

 

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