Asian stocks rise strongly as investors count down to Fed

Oil prices retreated in Asian trading hours on Wednesday following fresh indications of growing oversupply ahead of the US Federal Reserve s long-awaited decision on interest rates.

The flash eurozone composite purchasing manager index for December fell to a two-month low (http://www.marketwatch.com/story/paris-attacks-slow-eurozone-growth-2015-12-16-44854741)of 54.0, while the manufacturing reading rose to a 20-month high at 53.1.

People are reflected on an electronic stock board along with domestic stock prices at a securities firm in Tokyo Wednesday, Dec. 16, 2015.

USA stocks rose on Tuesday as oil prices recovered and investors looked ahead to the Federal Reserve’s rate announcement.

The European Central Bank earlier this month announced a cut to overnight deposit rates from minus 0.2 per cent to minus 0.3 per cent and extended a €60billion stimulus programme by six months.

On Wall Street, the Dow Jones Industrial Average rose 0.90 percent following a rally in oil prices.

Futures on the Standard & Poor’s 500 Index added 0.2 per cent after the measure gained 1.1 per cent on Tuesday.

Yields on Australian notes due in a decade climbed by five basis points, or 0.05 percentage point, to 2.87 per cent, as rates on similar maturity debt out of New Zealand rose by four basis points. “But I’m not sure the market will even pay much attention with eyes on oil prices, credit markets, and the Chinese renminbi”.

High yield bond market has been under pressure as the Fed meeting gets underway tomorrow and the recent plunge in oil market also affected bonds worth $2 trillion issued to shale oil companies since 2010.

“(Fed chair) Yellen should stress data-dependence in following up with further tightening next year and will surely not drop any heavy hints about the timing of the next move.

Department store operator Hudson’s Bay Co is close to a deal to buy online luxury retailer Gilt Groupe for about $250 million US, the Wall Street Journal reported.

Australia’s S&P/ASX 200 Index jumped 2.1 per cent, rising for the first time since Dec 7 amid gains in energy and mining shares.

Gains in shares of Exxon Mobil and Chevron, up 4.5% and 3.8% respectively, helped propel the Dow higher.

Beazer Homes rose 30 cents, or 2.6 percent, to $11.79.

The benchmark was pulled down by some of the country’s big banks, with Commonwealth Bank shares sinking 0.7% while ANZ finished the day down 1.3%.

Brent crude had fallen to $36.33 a barrel on Monday before rebounding and heading back towards $38, but then it slipped back to $37.61.

The dollar edged back from a near one-week high versus a basket of other major currencies with Citi, the FX market’s single biggest player, saying positioning in the dollar against the euro was effectively neutral now after a clearout over the past fortnight. While the U.K.’s FTSE 100 Index surged up by 2.5 percent, the German DAX Index and the French CAC 40 Index soared by 3.1 percent and 3.2 percent, respectively.

Fed funds futures, used by investors and traders to place bets on central-bank policy, showed an 81 per cent likelihood of a rate increase by the Fed this week.

The commodity has taken a hammering since December 4 – falling about 12 percent – when the OPEC exporters’ group refused to set output limits, adding to worries about a supply glut. In early Asian trading, the dollar was steady against abasket of currencies at 97.668 .dxy .