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Asian stocks gain after oil prices sink

Asian stocks gain after oil prices sink
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First Published: Mon, Jul 21 2008. 05 58 PM IST
Updated: Mon, Jul 21 2008. 05 58 PM IST
Hong Kong: Asian stock markets rose sharply on Monday as sentiment improved thanks to lower crude oil prices and stronger-than-expected earnings from US banks.
In Hong Kong, the blue-chip Hang Seng Index climbed more than 3% to 22,532.90. Markets in South Korea, Taiwan and Australia were each up over 3.5%.
Japan’s financial markets were closed for a public holiday.
Investors were feeling upbeat after Citigroup Inc. reported a second-quarter loss on Friday morning that nonetheless topped analyst projections, joining Wells Fargo & Co. and JPMorgan Chase & Co. in delivering better results than anticipated.
The news, which seemed to overshadow weaker results from Google Inc. and other tech giants, pacified some of the worries still surrounding the US financial sector nearly a year into the credit crisis.
At the same time crude oil prices have been in a downward spiral. Late afternoon in Singapore, light, sweet crude for August delivery was trading above US$130 a barrel in electronic trading on the New York Mercantile Exchange — down about US$17 from a trading record hit earlier in the month.
While problems still loomed for the US economy and other markets, last week’s drop-off in oil prices was a relief for regional markets hungry for good news.
“Nothing has fundamentally changed in these markets. But you have to take into account oil. There’s increasing confidence it will go down, and that is at least 60% of the move we’re seeing today,” said Benjamin Collett, head of hedge fund sales trading at Daiwa Securities SMBC Co. in Hong Kong.
In Hong Kong, financials helped lead the market higher.
In other markets, mainland China’s Shanghai Composite Index rose almost 3% to close at 2,861.42.
Real estate and financial stocks gained on expectations the government will ease monetary policy.
The market was encouraged by a government economic conference last week, though no results have been released from the closed meeting, said Mao Nan.
Data released last week showed June inflation easing, which also prompted suggestions Beijing might try to boost economic growth by laying off some its tight credit policies.
The main Shanghai index is down some 50% since hitting a record high on Oct. 16 but has gained 4.5% this month.
“We think the rise of the stock markets is going to last at least till the Olympics because of the positive policy influence,” said Zhai Peng, a strategist for Guotai Junan Securities. “It’s just that the mood of investors is not quite high at the moment. But in the long run, it’s still the macroeconomy that will determine the market’s direction.”
Meanwhile, Taiwan’s main stock index climbed nearly 4%, boosted by last week’s strong performance on Wall Street and gains on regional bourses. Financial and electronics issues stood out, though most sectors were higher.
In Australia, the country’s benchmark advanced more than 3.5%, led partly by financials amid signs that inflation might slow.
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First Published: Mon, Jul 21 2008. 05 58 PM IST