Asian stocks extend best gains since 2009 on stimulus hopes and oil rally, STI up 1.7%

A pedestrian walks past a stock markets indicator board in Tokyo, Japan, Feb 15, 2016.
A pedestrian walks past a stock markets indicator board in Tokyo, Japan, Feb 15, 2016. PHOTO: EPA

WELLINGTON/HONG KONG (BLOOMBERG) - Asian stocks headed for the biggest two-day gain in six years on Tuesday (Feb 16), extending a worldwide rally in riskier assets on speculation that governments will act to boost economic growth and shore up the oil market.

China led the advance in regional shares after data showed a record surge in new credit last month, fueling bets that state-run banks will step up lending to revive the world's second-largest economy.

Japan's Topix index rose 2.2 per cent, led by a 16 per cent surge in SoftBank Group Corp. after the wireless carrier said it's prepared to spend a record 500 billion yen buying back stock.

China's blue-chip CSI300 index jumped 2.9 per cent while the Shanghai Composite Index advanced 2.8 per cent. Hong Kong's Hang Seng Index added 1.6 per cent while the Hong Kong China Enterprises Index gained 3.0 per cent.

Singapore's Straits Times Index was up 1.66 per cent at 2,651.28 as of 1:30 pm.

The MSCI Asia Pacific Index rose 1.4 per cent at 12:17 pm in Hong Kong, bringing its two-day gain to 5.6 per cent, the most since April 2009.

China's lending data followed an expression of confidence in the economy from central bank Governor Zhou Xiaochuan over the weekend and reassurances from European Central Bank President Mario Draghi on Monday that policy makers will act should financial turmoil threaten price stability.

"Central banks will try to calm the markets down a little bit, and then investors will start to step back in," said Sean Fenton, a Sydney-based money manager at Tribeca Investment Partners. "There's enough value starting to emerge in certain areas that investors will eventually take advantage of that."

Crude futures jumped as much as 4 per cent in London after Saudi Arabia's oil minister was said to plan a meeting with his Russian counterpart in Doha.

The 43 per cent tumble in crude over the past year has restrained growth in oil-rich emerging countries and heightened sensitivity to any sign of willingness by Saudi Arabia, the de facto Opec leader, to discuss coordinated production cuts.

Standard & Poor's 500 Index futures climbed, while US Treasuries fell as trading resumed after an American holiday on Monday.

China's broadest measure of new credit surged to an all- time high, with aggregate financing rising to 3.42 trillion yuan in January, compared with the median forecast of 2.2 trillion yuan in a Bloomberg survey.

Premier Li Keqiang said on Monday that China will take decisive actions if needed amid recent global economic headwinds and falling equity markets, according to a Beijing News report carried on the central government website. Policy makers are expected to release a package of measures to ensure economic growth is in a reasonable range this year, the Economic Information Daily reported, citing unidentified people.

The MSCI All-Country World Index of shares in developed and emerging markets was poised for a third day of gains, following a rout that erased more than US$8 trillion from global equity values this year.

Brent for April settlement advanced as much as US$1.33 to US$34.72 a barrel. The contract rose 3 cents Monday after an 11 per cent gain on Friday. West Texas Intermediate climbed as much as US$1.50 to US$30.94 a barrel on the New York Mercantile Exchange from the Friday close.

Saudi Arabia has insisted that it won't reduce production to tackle the global oil glut unless major producers outside the Organization of Petroleum Exporting Countries co-operate. While Russian energy minister Alexander Novak has said he could consider output cuts if other producers joined in, Igor Sechin, chief executive officer of the country's largest oil company Rosneft OJSC, said last week he would defend traditional markets and expressed doubts over coordinated action.

"The fact that there is going to be a meeting is an advance," said Ric Spooner, chief markets analyst at CMC Markets in Sydney. "There's obviously a long way to go. The difficulties of getting an agreement are legendary, particularly with as many players as there are in Opec."

Copper futures gained 0.9 percent in London, while gold dropped 1.4 per cent in the spot market.

The yen slipped 0.2 pe rcent against the US dollar as demand for haven assets receded, while China's yuan weakened 0.3 per cent in onshore trading after a 1.3 per cent surge on Monday.

South Korea's won dropped 0.7 per cent as investors focused on post interest-rate review comments from the central bank governor for indications of further easing to shore up the economy. Policy makers kept interest rates unchanged at a record low for an eighth meeting on Tuesday.

Yields on 10-year U.S. Treasuries rose four basis points, or 0.04 percentage point, to 1.79 per cent. The move is a reversal from last week, when tumbling equities sent investors rushing to bonds and pushed the benchmark 10-year US yield to within 15 basis points of a record low.