TOKYO: Asian shares rallied on Thursday, taking heart from a late recovery on Wall Street after U.S. politicans appeared near to a temporary deal to avert a federal debt default and as Russia reassured Europe on gas supplies, calming volatile markets.
Oil prices also dropped back from multi-year highs hit a day earlier, having been a major contributor to this week’s equities sell off, while U.S. benchmark Treasury yields and major currencies steadied amid the calmer mood, report agencies.
“Sharp increases in energy prices have clearly contributed to the latest leg up in bond yields, which has been accompanied by weakness in equity markets around the world,” analysts at Capital Economics wrote in a note.
As oil prices came off on Thursday, there were gains in share benchmarks in Korea up 1.3 per cent, Australia up 0.64 per cent, and Hong Kong up 2 per cent.
Japan’s Nikkei rose 0.89 per cent, and U.S. stock futures, the S&P 500 e-minis, gained 0.42 per cent.
Chinese markets remained closed for a holiday.
U.S. crude dipped 0.34 per cent to $77.17 a barrel, extending a fall from late on Wednesday after hitting a seven-year high of $79.78 earlier that day. Brent crude was steady at $81.04 per barrel, off its three -year high of $83.47 also hit on Wednesday. [O/R]
Gas prices also fell, a day after Russian leaders indicated that supply to Europe could increase, which contributed to a late rally on Wall Street after declines in European stock markets.
The Dow Jones Industrial Average rose 0.3 per cent, the S&P 500 <.SPX gained 0.41 per cent and the Nasdaq Composite added 0.47 per cent, also boosted by a proposal from the Senate’s top Republican, Mitch McConnell, to allow an extension of the federal debt ceiling into December. Worries the U.S. would default on its debt, have weighed on stocks along with the rising energy prices.
The next U.S. event in focus for global investors is payrolls data due Friday, with investors anticipating that a reasonable figure will mean the U.S. Federal Reserve will begin tapering its massive stimulus programme at its November meeting.
The dollar was steady, not too far from 12 month highs hit last month against a basket of currencies, and held at a 14 month high against the Euro.
The yield on benchmark 10-year Treasury notes was 1.5415 per cent off from Wednesday’s three and a half month high of 1.573 per cent.