Asian equity markets mostly rallied Thursday on strong US data and expectations for fresh eurozone stimulus measures, while oil prices gave up early gains to resume their downward trend after a surge in New York.
Confidence was given a much needed boost by minutes from the US Federal Reserve’s December meeting suggesting it will not hike interest rates before April.
Tokyo surged 1.67 percent, or 281.77 points, to 17,167.10 as the yen gave up recent gains against the dollar, while Sydney climbed 0.52 percent, or 27.89 points, to close at 5,381.5 and Seoul advanced 1.11 percent, or 20.82 points, to 1,904.65.
Hong Kong rose 0.65 percent, or 154.27 points, to 23,835.53.
However Shanghai tumbled 2.39 percent on profit-taking in the afternoon following a rally that has seen the index surge more than 50 percent since November. The benchmark index fell 80.49 points to 3,293.46.
The advances come as welcome relief for global markets, which have been hammered by a slump in oil prices and growing fears that Greece could exit the eurozone as an anti-austerity party looks set to win this month’s general election.
Investors were given a lift after data showed consumer prices in the eurozone fell in December for the first time since October 2009, at the height of the financial crisis.
The news, raising fears the bloc is about to slip into a deflationary spiral, fuelled expectations the European Central Bank will embark on a vast bond-buying programme known as quantitative easing (QE).
“(ECB chief) Mario Draghi will find it very difficult to deny” that deflation is negatively affecting the eurozone, “and this could force him to fire up the printing press”, said IG analyst David Madden.
However, the likelihood the ECB will begin pumping out extra cash pushed the euro to $1.1802 at one point on Wednesday, its lowest since January 2006.
On Thursday it bought $1.1817, down from 1.1842 late in New York. It also fetched 141.60 yen compared with 141.70 yen in US trade.
The dollar was at 119.80 yen compared with 119.17 yen in New York.
– ‘No excuse for ECB’ –
“The inflation data is taking a toll on the euro,” Naohiro Nomoto, an associate for currency trading at Bank of Tokyo-Mitsubishi UFJ in New York, told Bloomberg News.
“I can’t think of any excuse for the ECB not to act (at its next policy meeting) in January.”
Adding to selling pressure on the single currency was the release of Fed minutes showing its board members would remain “patient” when deciding when to hike interest rates, indicating the process was unlikely to begin “for at least the next couple of meetings”. This, analysts say, suggests April at the earliest.
Wall Street rallied on the report after suffering a five-day sell-off. The Dow added 1.23 percent, the S&P 500 gained 1.16 percent and the Nasdaq rallied 1.26 percent.
US shares were also helped by data showing the trade deficit shrinking sharply to its smallest size in nearly a year and the private sector adding a higher-than-expected 241,000 jobs in December.
Oil prices rose in the morning session in Asia but gave back those advances later on, despite the gains across equity markets.
US benchmark West Texas Intermediate for February delivery dipped two cents to $48.63 and Brent North Sea crude edged down 15 cents to $51.00. Economists remain wary and warn they could resume their downtrend from five-and-a-half-year lows.
Gold fetched $1,208.18 an ounce, compared with $1,214.38 on Wednesday.
In other markets:
— Taipei added 1.74 percent, or 157.94 points, to 9,238.03.
Taiwan Semiconductor Manufacturing Co gained 2.99 percent to Tw$138.0 while AU Optronics Corp was 7.0 percent up at Tw$18.9.
— Wellington ended 0.29 percent higher, adding 16.00 points to 5,574.05.
Fletcher Building rose 0.37 percent to NZ$8.12 while Contact Energy was down 0.47 percent at NZ$6.36.
— Manila finished 0.79 percent higher, adding 57.93 points to 7,367.63.
Ayala Land rose 4.44 percent to 35.25 pesos, Metropolitan Bank gained 2.47 percent to 87.10 pesos and SM Investments added 1.20 percent to 840.00 pesos.