World Markets Cheer Oil Rally, Mostly Up

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Most Asian markets registered a rebound today following a weak session yesterday. The optimism that kept markets high was fueled once again by oil, which extended its gains into today. Referring to a tight correlation between equity markets and oil, AVA Trade analyst said that global markets are acting as if they are a hostage to oil price movement. Australia’s ASX rose by as much as 2% to 5,029.30.

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Nikkei and Taiwan’s TSEC exceptions

The Shanghai SE Composite Index also posted a gain of 1.53% at 2,781.02 while Hang Seng finished the day higher at 19,183.09, up by 1%. Only Japan’s Nikkei 225 and Taiwan’s TSEC 50 seemed to have bucked the trend as each fell by 0.85% to 17.045 and 8,063 respectively. According to analysts, Nikkei’s losses could be fuelled by the strengthening of the yen against the dollar, which is especially puzzling given the Bank of Japan’s new negative interest rate policy.

Meanwhile, European indices are broadly positive as the FTSE 100 added 35.80 points to 5,872.94 during late Asian trade. The Euronext 100 is flat at 839.65 while Germany’s DAX gained 0.41% and is trading near 9,473. France’s CAC 40 is marginally lower, trading down by 0.20% to 4,219.

European traders will be looking forward to the quarterly inflation report to be released by the Bank of England later today to help assess the direction of the UK economy.

U.S. markets firm

U.S. markets remained firm yesterday despite weak non-manufacturing and job growth data that failed to indicate that the U.S. economy is growing at the pace expected. The fall in service sector activity may have added to the hopes that the Federal Reserve will find it difficult to keep its hike rate pace as planned earlier, hinted at by New York Federal Reserve head William Dudley yesterday.

Growing speculation that OPEC and non-OPEC countries will arrange a meeting to address oil oversupplies has helped Brent crude chug back above the $35 per barrel level.

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