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Energy, airline shares lead Asia’s stock rebound

Energy, airline shares lead Asias stock rebound

Asian shares advanced on Tuesday, with energy and airline counters leading the rebound, as investors took heart from the rally on Wall Street.

Major US averages each rose over 1 percent on Monday, helped by a sharp jump in oil prices and as investors brushed off jitters related to last Friday’s deadly terror attacks in Paris. The S&P 500 led gains with a rise of 1.5 percent, while the Dow Jones Industrial Average and Nasdaq Composite closed up 1.4 and 1.2 percent respectively.

“US stock markets managed worthwhile rallies in Monday trading, as last week’s terrorist attacks in Paris had only a fleeting impact on investor sentiment. In the context of relative market reactions seen at the time of past terrorist-related events like the Madrid commuter train bombings in early 2004 and the London bombings of mid-2005, initial cautiousness quickly dissipated,” Tony Farnham, an economist at Patersons Securities, wrote in a note released Tuesday.

China stocks up

Share markets in China tracked the gains across Asia on Tuesday, with the benchmark Shanghai Composite elevating 0.9 percent at the start of trade.

Air carriers were among the early winners; Air China, China Eastern Airlines and China Southern Airlines gained between 0.4 and 0.8 percent.

The blue-chip CSI300 Index rallied 1.1 percent, while the smaller Shenzhen Composite continued to outperform, up 1.6 percent on the back of speculation that a stock trading link between the Shenzhen and Hong Kong stock exchanges could be implemented in the coming months.

According to a note from spread better IG, Hong Kong’s Chinese broadsheet Oriental Daily reported that Ronald Leung, an international advisory committee member of the China Securities Regulatory Commission (CSRC), hinted that the stock connect is likely to be announced before the end of the year and to begin operations in the first quarter of 2016. In addition, Shenzhen officials reportedly visited Beijing to lobby the central government for the trading link to start as soon as possible.

Hong Kong’s Hang Seng index recovered in early trading, opening 1.6 percent higher.

Nikkei leaps 1.4 percent

Japan’s Nikkei 225 recouped all of Monday’s losses, with sentiment bolstered by the inspiring handover from Wall Street and a weaker yen.

The Japanese currency was last seen at 123.23 per dollar, compared with 122.44 in the previous trading session, giving export-oriented counters a lift. Toyota Motor led gains among carmakers, up 1.9 percent, while Panasonic and Canon elevated 1.2 and 1 percent respectively.

Energy plays enjoyed a rare reprieve after U.S. oil ended a three-day losing streak on Monday. Large-cap Inpex tacked on nearly 3 percent, while Showa Shell Sekiyu and JX Holdings gained over 2 percent each.

Investors also picked up shares of battered Japanese carriers following the prior day’s selloff; Japan Airlines and All Nippon Airways Holdings rose 0.7 and 1.1 percent respectively.

ASX rises 1.1 percent

Australia’s S&P ASX 200 index was on course to break a two-session losing streak early Tuesday.

Among gainers, major lenders such as Australia and New Zealand Banking and National Australia Bank advanced more than 1 percent each. Commonwealth Bank of Australia, which will be having its 2015 annual general meeting on Tuesday, climbed up 1.8 percent.

Large-cap Telstra extended gains by piling on 1.7 percent, while Qantas Airways clawed back Monday’s hefty losses with a rise of 2.1 percent.

In the resources sector, oil and gas producer Santos surged 2.2 percent, thanks to stronger crude oil prices overnight. Market bellwether BHP Billiton notched up 1 percent, while rivals Rio Tinto and Fortescue Metals gained 0.9 and 0.4 percent respectively.

In other news, rail and ports giant Asciano said Monday it would allow rival Qube Holdings to conduct due diligence after the latter made an informal USD 6.3 billion takeover offer last week. Asciano shares notched up 0.6 percent.

Meanwhile, the Reserve Bank of Australia (RBA) said a subdued inflation outlook meant there was scope to ease monetary policy further if necessary, but appeared to set a high bar for such a move as interest rates were already “very low”. The Australian dollar was near flat at USD 0.7088 against the U.S. dollar.

Kospi jumps 0.9 percent

Hefty buy orders for heavyweight components such as Samsung Electronics led South Korea’s Kospi index higher at the open.

Shares of the technology giant leaped nearly 1 percent, while steelmaker Posco jumped 3 percent. Refiners SK Innovation and S-Oil tracked the gains in oil stocks region-wide, up 1.7 and 2.5 percent respectively.

Korean Air reported a consolidated operating profit of 289.5 billion won (USD 247.3 million) for the three months ended September, up from a 240.7 billion won a year earlier and exceeding the expected 258 billion won. Shares of the country’s largest airline by revenue soared 1.6 percent, a day after losing 3.3 percent on the back of dented sentiment due to the Paris attacks.

Asiana Airlines, South Korea’s second-largest flag carrier, was little moved after announcing a third-quarter net loss of 62.16 billion won (USD 53.02 million), down from a net loss of 85.4 billion won three months earlier, as sales and operating profit grew amid dwindling costs.

Indonesia eyed

Elsewhere in the region, Indonesia’s central bank is expected to keep its benchmark interest rate unchanged on Tuesday in the wake of rising expectations of a rate hike in the US next month.

While economists agree sluggish domestic growth warrant a rate cut, all but one of 13 in a Reuters poll think Bank Indonesia (BI) has no choice but to keep its policy rate at 7.5 percent, where it’s been since February.

Recent comments from Bank Indonesia (BI) Governor Agus Martowardojo also suggest that the central bank will focus on stability over growth policy, indicating that a near-term rate cut was unlikely, according to an article by Indonesia’s largest English broadsheet, The Jakarta Post, on November 10.

Indonesia’s benchmark Jakarta Composite starts trading at 9am local time.

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