Energy Shares Boosted by Oil's Rise
May 26 2016 - 1:30AM
Dow Jones News
Energy shares rose across Asia on Thursday as oil prices
breached a key threshold, though lingering concerns about a U.S.
interest-rate increase capped gains in stocks.
Japan's Nikkei Stock Average was up 0.3%, while Australia's
S&P/ASX 200 was down 0.2% and Korea's Kospi slipped 0.1%. In
China, the Shanghai Composite Index slipped 1%. Hong Kong's Hang
Seng Index was down 0.2%.
In early Asian trading hours, Brent oil futures, the global
benchmark for oil, broke above $50 a barrel, a psychologically
important benchmark for traders. Goldman Sachs last year projected
oil could drop to as low as $20 a barrel, and the price plummet was
a key worry for stock investors globally.
Falling oil prices hurt profit at energy companies and the
financial institutions that loan money to them. In addition, the
decline hasn't translated into a big uptick in consumer spending in
the U.S., which has added to concerns about the health of the U.S.
economy, analysts said.
As oil climbs higher, that "will be a good, positive sentiment
for the equities market," said Alex Wijaya, a senior sales trader
for CMC Markets in Singapore.
Shares of Oil Search were up 0.8%, while Woodside Petroleum rose
1.5% in Australia.
But the cheer wasn't enough to boost stocks overall in Hong Kong
and China.
In Hong Kong, energy shares were the only bright spot. Chinese
oil producer PetroChina was up 0.8%. Traders otherwise seemed to be
booking profit from the Hang Seng Index's 2.2% rise Wednesday, the
largest one-day gain since mid-April.
"Fundamentally, [traders] are still haunted by the sluggish
China economy," Mr. Wijaya said. "It's still doubtful on how much
further these shares can recover."
Chinese stocks also extended their retreat, in what could be the
Shanghai Composite Index's third straight day of losses. Energy
shares, however, bucked the trend, as China's CSI 300 energy
subindex was up 0.3%.
Concerns about the health of the U.S. economy resurfaced, after
an early reading of the Markit Economics' services purchasing
managers index came in weaker than expected overnight.
In a sign of investors' caution, the price of gold, a
traditional safe-haven asset, rebounded in early Asian trading
Thursday to $1,232.30 a troy ounce.
Citigroup analysts said in a morning note that "we do not
anticipate investors in Asia will add much risk to their
portfolios" before further economic data from the U.S. later
Thursday, a scheduled speech by U.S. Federal Reserve Chairwoman
Janet Yellen on Friday and the closure of stock markets in the U.S.
and the U.K. on Monday in observance of public holidays.
The price of Brent crude oil was recently trading at $50.02 a
barrel.
Write to Dominique Fong at Dominique.Fong@wsj.com
(END) Dow Jones Newswires
May 26, 2016 01:15 ET (05:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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