TOKYO - Asian stocks gained early on Monday (Jan 25), relieved after seeing Wall Street rally on Friday on the back of a sharp rise in crude oil prices.
MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.2 per cent, putting further distance between a four-year low plumbed last week. Australian shares were up 1 per cent.
The S&P 500 rose 2 per cent and the Dow added 1.3 per cent Friday as a cold snap in North America and Europe caused a rally in oil prices. The S&P energy sector surged 4.3 per cent.
Global equities were also boosted last week as the European Central Bank signalled additional monetary easing steps to come, and focus fell on the Federal Reserve and Bank of Japan meetings this week.
From the Fed, investors will look for any hints of when a second interest rate hike would come, while speculation mounted last week towards the BOJ implementing additional easing measures.
"The calendar this week is busy, with the Federal Open Market Committee and BOJ meetings the main highlights. We expect no action from the Fed or BOJ, although investors will be looking for a more dovish forward bias as the renewed decline in oil prices lowers inflation expectations globally," wrote strategists at Barclays.
Risk aversion amid fears of a China-led global slowdown and oil prices sinking to 13-year lows had rocked global markets at the start of the year, and the lull in flight-to-quality seen towards the end of last week weighed on safe havens like US Treasuries and the Japanese yen.
The US dollar was steady at 118.75 yen after surging 0.9 per cent on Friday, when it touched a two-week high of 118.88. The euro was steady at US$1.0792 after losing 0.8 per cent on Friday.
The Australian dollar, sensitive to the ebb and flow in risk appetite and fluctuations in commodity prices, traded at US$0.7007 after touching a nine-day high of US$0.7046 on Friday.
Crude, recently under pressure from a global glut, jumped over one per cent as harsh winter weather boosted demand for heating oil. US crude climbed 9 per cent and Brent bounced 10 percent on Friday.
US crude was last down 0.2 per cent at US$32.13 a barrel. The contracts had descended to as low as US$26.19 last week, their lowest since May 2003.