By Alun John and David Henry
HONG KONG/NEW YORK (Reuters) – Asian stocks rose on Tuesday, tracking a late Wall Street rally as governments eased coronavirus lockdowns while oil extended gains on expectations fuel demand would begin to pick up.
European stocks were set to follow suit, with FTSE futures up 1.31% and EuroSTOXX 50 futures 1.5% higher, after sharp falls on Monday. U.S. stock futures rose 0.75%.
Amid light trading volumes, with China, Japan and South Korea closed for public holidays, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.84%.
The gains were led by Australia’s ASX 200, which rose 1.42%. Hong Kong’s Hang Seng climbed 0.84%.
Michael McCarthy, chief market strategist at CMC markets, cautioned against reading too much into the day’s moves in Asia, with few meaningful leads for investors.
“While the rises are good to see, much of the region is still on holiday, and (Australian) volumes are down 10% and that means this won’t be too convincing for traders,” he said.
The Asian rally followed late U.S. gains with the S&P 500 ending up 0.42%, driven by technology names such as Microsoft, Apple and Amazon.
The upturn followed more optimistic statements from the governors of California and New York for reopening businesses. Several other countries including Spain, Italy, Nigeria, India, and Malaysia also tentatively eased lockdowns.
Brent crude rose 4% to $28.30 a barrel, up for a sixth straight day, and U.S. crude rose 6.03% to $21.60 a barrel, as countries began loosening coronavirus restrictions and crude supply cuts took effect.
Analysts at Commonwealth Bank of Australia said the structure of the oil price rises, with bigger gains in nearer-dated contracts, suggested expectations of more production cuts and a restoration of fuel demand later this year.
They added, though, that this meant prices are highly unlikely to recover the big falls since the start of the year.
The optimism about an economic recovery from the coronavirus outbreak outweighed, at least briefly, the latest war of words between China and the United States, which had dragged down Asian and European shares on Monday.
An internal Chinese report warns that Beijing faces a rising wave of worldwide hostility in the wake of the outbreak that could tip relations with the United States into confrontation, people familiar with the paper told Reuters.
“Tension between China and the U.S. is going to be one of those themes that comes and goes over the next few months in the lead-up to the presidential election,” said Jim McCafferty, joint-head of APAC equity research at Nomura.
The dollar index dropped 0.1%, as commodity currencies inched up, and spot gold lost 0.08% to $1,700 an ounce.
(Reporting by Alun John in Hong Kong and David Henry in New York; Editing by Sam Holmes)