Asia: Stocks rally on earlier gains in oil prices

Asian stocks were in positive territory at the closing bell on Monday, lifted by the energy sector on earlier gains in oil prices.

Japan’s Nikkei 225 finished 0.90% higher, Hong Kong’s Hang Seng index increased 1.36% and the Shanghai Composite gained 0.77%.

Prices were up to nearly $33 per barrel during the session but declined by the time most markets in Asia had closed.

At 1024 GMT, Brent crude rose 2.09% to $31.52 per barrel and West Texas Intermediate increased 2.5% to $31.38 per barrel at 1025 GMT.

Adding to the upbeat sentiment, expectations that central banks in China and Japan will increase stimulus grew. The Bank of Japan holds its policy meeting on 28-29 January.

BoJ Governor Kuroda on Saturday at Davos said that the central bank “won’t hesitate adjusting policy, including easing policy, if necessary to achieve our 2% price target”.

“As dovish as these remarks sound, the BoJ is in the habit of repeating the words that the BoJ ‘won’t hesitate’,” according to Rabobank.

“This phrase was used by Kuroda last May, September and November although the BoJ has not made any significant adjustment to its QQE programme since October 2014.”

Investors are also eagerly awaiting the Federal Reserve’s decision on interest rates on Thursday.

“While the Fed is expected to maintain status quo, the accompanying statement is going to be the centre of attention, especially given the recent slide of oil prices below $30 and the renewed Chinese sell-off,” said Brenda Kelly, head analyst at London Capital Group.

“The global macroeconomic conditions may not be appropriate for the Fed to hike 3-4 times this year as scheduled.”

Meanwhile, the Japanese yen stayed near its weakest level against the US dollar in two weeks, boosting exporters in the nation. The yen was last at 118.77 to the US dollar.

China’s spot yuan fell 0.2% against the US dollar.