HONG KONG: Asian stock markets advanced strongly Tuesday, mirroring rallies in Europe and New York as the initial shock from the deadly Paris terror attacks wore off.
While Friday’s carnage, which left 129 people dead, fuelled fears in the region about the effects on the already troubled European economy, confidence was buoyed by a defiant reaction around the world.
The three main markets on Wall Street each ended sharply higher, while London and Frankfurt also advanced and Paris pared early selling to end only marginally lower.
That filtered through Tuesday to Asia’s trading floors, with Tokyo, Hong Kong, Shanghai and Sydney all posting gains of much more than one percent.
“Good gains in overnight US markets should wash across” into Asia, said Tony Farnham, a strategist at Patersons Securities in Sydney. “Initial cautiousness has quickly dissipated.”
Airline shares, which took a beating Monday on worries about the impact on the travel industry, recovered with Australia’s Qantas and Cathay Pacific in Hong Kong and Shanghai-listed Air China all rallying.
Energy firms were big gainers, rising in line with oil prices as it emerged that US-led jets targeted the Islamic State group’s oil operations in retaliation for the Paris horror.
The latest developments renewed the possibility of a rise in the level of conflict in the Syria-Iraq region that some fear could disrupt oil output.
Hong Kong-trade CNOOC surged almost nine percent, while Inpex in Tokyo and Sydney-listed Origin each jumped more than two percent.
The euro, which turned down against the dollar and yen Monday, continue to face pressure after a key official at the European Central Bank suggested it would further loosen its monetary policy.
“It’s key for a central bank to keep inflation expectations anchored, especially in a period of slack in the economy, and we have some signals that these inflation expectations are still fragile,” Executive Board member Peter Praet said in a Bloomberg interview in Frankfurt Monday.
“There are risks and this is why we’re considering further action.”
His comments come as the eurozone economy struggles to pick up and prices remain subdued, with a multi-billion-euro bond-buying scheme aimed at boosting lending unable to get traction.
The bank’s chief Mario Draghi last month hinted at a widening of the programme in December, which — combined with expectations of a US interest rate hike before 2016 — has pushed the euro to multi-month lows.
On Tuesday the single currency fell to $.10666, its lowest since April.
The yen was also weaker after Monday’s news that Japan had slipped back into recession for the second time in Prime Minister Shinzo Abe’s tenure increased the likelihood the country’s central bank would ramp up its own stimulus.