Asia shares higher on virus slowdown, oil higher on hopes of output cuts

Nurluqman Suratman

07-Apr-2020

SINGAPORE (ICIS)–Asian petrochemical shares rallied on Tuesday amid signs that coronavirus fatality rates in some of the world’s worst-hit regions are slowing down, while oil prices were up on hopes that Saudi Arabia and Russia will soon agree to output cuts.

At 02:20 GMT, Japan’s Asahi Kasei Corp was up by 2.03%, Taiwan’s Formosa Petrochemical Corp was 0.50% higher while South Korea’s LG Chem jumped up by 2.70%.

Overnight, US stocks soared on tentative signs that the coronavirus outbreak is stabilising in the US and some of the other hotspots such as Spain and Italy.

All three equity benchmarks in the US jumped over 7% and finished near sessions highs.

“Asian markets may hope to ride on the improved overnight risk showing in US financial markets, but the rally momentum could be constrained,” Singapore-based OCBC Bank said in a note.

Japan’s benchmark Nikkei 225 Index opened more than 3% higher on news that Prime Minister Shinzo Abe will confirm a state of emergency in seven key regions of the country later on Tuesday.

Company/Stock Exchange % Change
Nikkei 225 (Japan) 2.03%
Asahi Kasei Corporation 2.76%
JXTG Holdings, Inc. 2.31%
Mitsubishi Chemical Holdings Corporation 1.56%
Mitsui Chemicals, Inc. 1.71%
Hang Seng Index (Hong Kong) 0.63%
Sinopec Shanghai Petrochemical Company Limited 1.58%
PetroChina Company Limited -1.34%
KOSPI Composite Index (South Korea) 0.81%
OCI Company Ltd 1.24%
SK Innovation Co., Ltd. 0.11%
LG Chem, Ltd. 2.70%
Lotte Chemical Corporation -0.57%
Hanwha Corporation 1.17%
TSEC weighted index (Taiwan) 1.58%
Formosa Petrochemical Corporation 0.50%
Nan Ya Plastics Corporation 0.90%
Formosa Chemicals & Fibre Corporation 2.21%
STI Index (Singapore) 1.79%
Wilmar International Limited -0.59%
Olam International Limited 2.90%
FTSE Bursa Malaysia KLCI (Malaysia) 1.07%
SSE Composite Index (Shanghai, China) 1.47%
Jakarta Composite Index (Indonesia) 0.28%
PT. Chandra Asri Petrochemical Tbk 0.00%

The Japanese government is now preparing a $990bn stimulus package to cushion the economic hit.

The emergency would last about a month and will gives governors the authority to order people to stay at home and businesses to close.

South Korea’s KOSPI Index was up by 0.81%, Hong Kong’s Hang Seng Index was 0.63% higher and the Singapore Straits Times Index was up almost 2%.

Singapore’s Finance Ministry on 6 April announced a third round of support measures which includes an injection of Singapore dollar (S$) 5.1bn to save jobs and livelihoods as Singapore begins its “circuit breaker” from 7 April to 4 May 2020.

In Malaysia, a ringgit (M$) 10bn supplementary package was announced on 6 April to support small-and-medium-sized enterprises who have been affected by the country’s movement control order.

In Indonesia, Finance Minister Sri Mulyani said that the authorities expect the coronavirus infections to peak in May, but warned that it might infect as many as 95,000 Indonesians by then.

Philippines President Rodrigo Duterte on Tuesday approved the extension of a lockdown and home quarantine measures to 30 April. The “Enhanced Community Quarantine” was extended by two weeks.

Crude oil prices rebounded sharply on Tuesday on fresh hopes that Saudi Arabia and Russia will agree to output cuts at a meeting on 9 April.

The two sides have been producing oil without constraint since their production-cut deal ended on 1 April this year.

$/bbl (02:53 GMT) Last price % change Net change Close High Low
Brent 33.91 2.60% 0.86 33.05 34.18 33.37
WTI 26.91 3.18% 0.83 26.08 27.19 26.29

Focus article by Nurluqman Suratman

Visit the ICIS Coronavirus topic page for analysis of the impact on chemical markets and links to latest news.

Image: Shutterstock

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