HONG KONG (AFP) – Asian markets rose in thin trade Monday ahead of the festive season, tracking cues from Wall Street where stocks surged in a Federal Reserve-fuelled “Santa Claus rally” last week.
Stabler oil markets also provided support, with crude prices ticking higher as analysts predicted the sector had bottomed out after plunging almost 50 per cent since June.
Sydney soared 1.94 per cent, or 103.35 points, to 5,442, Seoul gained 0.68 per cent, or 13.14 points, to 1,943.12, Hong Kong climbed 1.26 per cent, 291.94 points to 23,408.57 and Shanghai was up 0.61 per cent, or 18.85 points, to 3,127.45.
Tokyo closed flat, edging up 13.74 points to 17,635.14.
Trading is expected to be thin this week at the start of the holiday season, with many traders away for Christmas and New Year celebrations.
The gains in Asia come after US stocks went from famine to feast last week, starting out fearful of crashing oil prices and finishing it smiling at a “Santa Claus rally”.
Worries about tumbling oil prices and the crashing Russian ruble, which has lost nearly half its value in 2014 against the dollar, prompted grim sentiment among investors.
But markets began reversing course as the US Federal Reserve left in place market expectations that it may raise interest rates only in the middle of 2015 – and not sooner – and gave a fairly upbeat assessment of the world’s biggest economy.
Following a two-day meeting, Fed Chair Janet Yellen offered reassurances that sharply lower oil prices are a net positive for the economy and that economic fallout from Russia’s struggles is likely to be limited.
US stocks rose for the third day in a row on Friday, with the blue-chip Dow Jones Industrial Average closing up 0.15 per cent at 17,804.80.
The broad-based S&P 500 rose 0.46 per cent to 2,070.65, about five points below its record.
The dollar stayed firm after Yellen’s comments. The greenback was at 119.51 yen in Asian afternoon trade, up from 119.43 yen in New York on Friday.
While the Fed did not accelerate its timeline for raising interest rates, currency traders are betting the US will increase borrowing costs more quickly than other major central banks, which would tend to boost demand for the dollar.
The euro bought $1.2240 and 146.30 yen, against $1.2227 and 146.06 yen in US trade.
On oil markets, US benchmark West Texas Intermediate (WTI) for February delivery gained 79 cents to $57.92 while Brent crude for February added 91 cents to $62.29 in afternoon trade.
Gold was at $1,198.02 an ounce, compared to $1,198.10 late Friday.