Asian stocks lift as fears ebb

Mixed gains have capped a turbulent end of the month for the region’s equities.

Most major Asian stock markets are on track to book monthly losses in June. Picture: AP/ Shuji Kajiyama.

Stock markets across Asia mostly finished higher on Thursday on the back of gains in energy and mining shares, capping a volatile and eventful first half of the year.

Thursday’s rebound signaled that investors were brushing off worries about the fallout from Brexit. Japan’s Nikkei Stock Average ended up 0.06 per cent, the local S&P/ASX 200 gained 1.8 per cent, and South Korea’s Kospi rose 0.7 per cent. Hong Kong’s Hang Seng Index closed up 1.8 per cent, and China’s Shanghai Composite Index ended down 0.1 per cent.

“The main reason behind [the gains] is that the market has more or less digested these Brexit shocks and a lot of pessimism has already been priced in last Friday and this Monday, so naturally we can see a technical or true rebound these few days,” said Margaret Yang, market analyst for CMC Markets in Singapore.

An overnight bounce in crude oil prices above the psychologically important level of $US50 a barrel pushed oil stocks higher in the Asia-Pacific region. In Hong Kong, shares of Cnooc Ltd. gained 2.5 per cent, and PetroChina Co added 2.1 per cent.

Shares of mining companies also rose after the US Dollar Index, which measures the US currency against a basket of currencies, weakened overnight. A weaker dollar lifts commodities because they are priced in the US currency, effectively making them cheaper to buy for those holding other currencies. This leads to expectations that buyers will purchase more of the commodities, and to investors pushing share prices higher. BHP Billiton gained 1.9 per cent, while Japan’s Topix mining index was up 1.6 per cent.

The US dollar’s relative weakness sent the price of commodities including gold, silver, copper and iron ore higher overnight, said Angus Nicholson, market analyst for IG, an Australian brokerage firm. That in turn helped materials shares in Australia on Thursday, he added.

The month of June began with investors worried about a strengthening yen, which prompted multiple warnings by Japanese officials that they could intervene in markets. Then global index provider MSCI held off from adding mainland Chinese-listed stocks to its Emerging Markets Index. By the end of the month, concerns about the UK’s vote to leave the EU spilled over into Asian markets, roiling stocks to bonds and currencies.