Asian shares extend rally cheered by oil rise
HONG KONG — Asian shares gained on Monday, extending last week’s global rally cheered by rising oil prices and news that China has replaced the head of its securities regulator.
Regional equities added to one of their best weeks this year with gains almost across the board, after news Russia and Saudi Arabia may freeze production sent crude higher.
Chinese shares advanced after state media reported the head of the securities regulator who oversaw a market rout last year has been dismissed, while Japan’s exporters gained on a weaker yen.
But traders remained cautious after a rollercoaster start to the year, while the pound sank after news London’s popular mayor will campaign for Britain to leave the EU in a June referendum.
“Last week was the first real positive trading week of 2016 for all developed markets,” said Evan Lucas, a markets strategist at IG in Melbourne.
But he cautioned that waning momentum before the weekend, when oil prices also reversed, “leaves everything caught in the middle of nowhere”.
Financial markets have been on edge this year as fears the world economy is stalling have sent stocks and commodities tumbling and hammered oil prices, already weighed down by a global supply glut.
Crude flirted with 13-year lows this month, diving below $30 a barrel, but news major producers Saudi Arabia and Russia plan to cap production has eased some concerns the market will be oversupplied for years.
On Monday, the front month US benchmark West Texas Intermediate contract jumped 0.91 percent to $29.91, while global benchmark Brent rose 0.67 percent to $33.22 a barrel.
China fires regulator head
Chinese shares jumped in early trade after state media reported Saturday the head of the country’s securities regulator, Xiao Gang, will be replaced by Liu Shiyu, chairman of the Agricultural Bank of China.
China has been struggling to reassure investors it has a grip on its financial markets after a rout last summer wiped $5 trillion off equities, prompting the government to step in and tighten regulations.
Shanghai fell 23 percent in January, the world’s worst-performing major market.
The benchmark climbed 0.92 percent by mid-morning on Monday, while Hong Kong gained 1.00 percent ahead of annual results from banking giant HSBC due at 0400 GMT.
In currency markets, the pound fell the most against the dollar in a month as campaigning over a potential “Brexit” from the European Union began in earnest.
Prime Minister David Cameron’s push to keep Britain in the bloc after clinching a “special status” reform deal took a blow on Sunday when popular London Mayor Boris Johnson said he would back leaving.
The pound dropped more than one percent against the dollar in response, and was trading at $1.4280 at 0230 GMT, compared to $1.4392 in New York on Friday.
“Brexit will be one of the biggest events in 2016,” said Lucas in a note to clients.
“Boris Johnson’s decision over the weekend to support the Brexit campaign has caused the pound to move wildly. He is widely believed to be the next leader of the Conservative Party and is highly popular — his position has a lot of influence.”
Key figures around 0230 GMT
Tokyo – Nikkei 225: UP 0.82 percent at 16,096.98
Shanghai – composite: UP 0.91 percent at 2,8856.71
Hong Kong – Hang Seng: UP 1.09 percent at 19489.47
Euro/dollar: DOWN at $1.1117 from $1.1131 on Friday
Dollar/yen: DOWN at 112.83 yen from 112.62 yen
New York – Dow: DOWN 0.1 percent at 16,391.99 (close)
London – FTSE 100: DOWN 0.4 percent at 5,950.23 points (close)
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