Global Markets: Australian Stocks Reach Highest Point Since 2008 -- 2nd Update

By Kenan Machado Features Dow Jones Newswires

Higher commodities prices helped Asia-Pacific stocks break through several days of directionless trading Tuesday, with some equities' benchmarks hitting levels not seen for at least a decade.

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Oil jumped 3% Monday, much of it within a few hours during U.S. trading after muted reactions in Asian and Europe to the weekend's political developments in Saudi Arabia.

That added to recent strength in Asian oil-related stocks, with crude at its highest level since mid-2015--even while sitting little changed in Tuesday trading.

Japan Petroleum jumped 6.1% and Inpex climbed 4.1%, the latter hitting a two-year high. They helped push the Nikkei up 1.6% after the index's sluggish start Tuesday. That allowed it to top its 1996 high and reach levels last seen in early 1992.

Meanwhile, Chinese major Sinopec jumped 3.8% in Hong Kong's morning session, which, along with another 3.1% gain in internet heavyweight Tencent, had Hong Kong's Hang Seng rising 1.2%. Tencent spinoff China Literature goes public Wednesday.

The Hang Seng's Tuesday-morning gains extended its Monday rebound, in which a near-2% decline was erased by the close, and put the index at fresh 10-year highs.

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Meanwhile, Australia's benchmark exceeded its 2015 peak to hit its highest point since early 2008--aided by commodities, arguably the country's biggest business.

The continuing low-interest-rate environment and a solid earnings season has presented a Goldilocks climate--an environment where economic conditions are seen as neither too weak nor too strong to warrant policy efforts to prevent activity from potentially overheating--said Andrew Bresler, deputy head of sales trading for the Asia-Pacific region at Saxo Capital Markets.

"There are few risks on the horizon" to cut into current valuations, he added. "Momentum is firmly on the side of global equity markets." Some have been concerned that equities globally have become overpriced.

Australian stocks notably lagged behind the region throughout 2017. But they came alive last month as prices for stocks and commodities rose globally, with the S&P/ASX 200 rising 4% in October, its best month of the year.

It climbed another 1.8% this first week of November, including 1% Tuesday.

Meanwhile, the Reserve Bank of Australia kept to its script at its policy meeting, keeping interest rates at the record low of 1.5%. It also maintained its forecast of a gradual rise in inflation over time and economic output to strengthen next year.

Major mining companies BHP Billiton and Rio Tinto led the day's gains, rising 3.9% and 2.1% to hit their best levels in two years and six years respectively.

The sector was helped by a further rebound in Chinese iron-ore prices, which recently hit four-month lows. Futures prices on the Dalian Commodity Exchange in China shot up about 5% Monday and rose another 2.5% during Tuesday morning's session.

"Rising steel prices now have investors alert to the possibility that iron ore" might be putting in a base, "justifying a rally in the major mining stocks," said Ric Spooner, chief market analyst at CMC Markets.

Stocks in Singapore, which are also influenced by oil prices, logged strong Tuesday morning gains.

The Straits Times Index was up 1%, hitting another two-year peak. Helping it was a bounce in the country's major banks, which have been held back of late by concerns about their energy-related loans. DBS jumped 3.4% to notch a fresh 18-year high.

A regional laggard was New Zealand, where the benchmark NZX 50 fell 0.1%. Company a2 Milk slid 4.5% and partner Synlait skidded 7.4% ahead of the bimonthly dairy-trade auction later Tuesday.

James Glynn contributed to this article.

Write to Kenan Machado at kenan.machado@wsj.com

(END) Dow Jones Newswires

November 07, 2017 01:08 ET (06:08 GMT)