Asia report: Markets mostly higher as oil prices rise

Markets in Asia finished mostly higher on Tuesday, following a mostly higher session on Wall Street overnight, as focus turned to energy prices ahead of an upcoming OPEC meeting in Vienna.

In Japan, the Nikkei 225 was up 0.7% at 22,416.48, as the yen strengthened 0.04% against the dollar to last trade at JPY 112.58.

On the mainland, the Shanghai Composite was up 0.55% at 3,411.09, and the smaller, technology-heavy Shenzhen Composite rose 0.78% to 1,987.45.

South Korea’s Kospi was up 0.12% at 2,530.70, while the Hang Seng Index in Hong Kong shot ahead 1.91% to 29,818.07.

Attention was also turned to Europe, after reports on Monday that Angela Merkel’s bid to form a new coalition government had collapsed.

The Chancellor had said on Monday that she would rather hold fresh elections than lead a minority government.

“It looks like Germany will be heading back to the electorate following the collapsed coalition talks this week, and little sign of any appetite for a resumption of the Grand Coalition,” noted ING head of Asia research Rob Carnell.

Oil was very much in focus ahead of a meeting of OPEC members in Vienna next week, where they will decide whether or not to support an output ceiling deal beyond March.

Iran’s oil minister reportedly claimed a majority of OPEC members would support an extension to the output cuts, although the final decision would not be known until the meeting.

Crude prices were higher during Asian trading, with Brent last ahead 0.45% at $62.50 per barrel and West Texas Intermediate adding 0.39% to $56.64.

In Australia, the S&P/ASX 200 was 0.3% firmer at 5,963.52, with the hefty financials subindex rising 0.16% as the big four banks ended the session mixed.

Australia and New Zealand Banking Group was 0.17% higher and Westpac Banking Corporation added 0.25%, while National Australia Bank was flat and Commonwealth Bank of Australia lost 0.04%.

That came after the Reserve Bank of Australia released the minutes from its November policy meeting, in which it stood pat on its official cash rate of 1.5%.

The minutes showed the central bank observing “considerable uncertainty around when and how quickly wage pressures might emerge”, along with questions as to how that could add to inflationary pressure.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 was the odd one out, falling 0.01% to 8,088.48.

It was led lower by outdoor equipment and apparel brand Kathmandu, which lost 4.6% after the firm said first-quarter earnings were up despite a dip in sales, as it cut the amount of discounted stock it sold.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.34% at AUD 1.32, and the Kiwi strengthening 0.13% to NZD 1.4668.