Oil prices extended gains after soaring more than 3 percent overnight on news that major U.S. oil producer Anadarko had announced plans to reduce capital spending due to lower oil prices. Market sentiment was also boosted when de-facto OPEC leader Saudi Arabia said it would limit its crude exports in a bid to tackle oversupply.
Brent crude rose 0.64 percent to trade at $50.52 a barrel and U.S. West Texas Intermediate crude gained 0.88 percent to trade at $48.31.
Despite the positive sentiment buoying oil prices, Wood Mackenzie noted that rebalancing was likely to be threatened in 2017 and 2018 due to greater volumes in the market. OPEC was likely to extend production cuts to the end of 2018 to “avoid calamity,” Wood Mackenzie chief analyst Simon Flowers added in a note.
“Recognizing the downside risks for the next two years, on July 10 we lowered our price forecasts by $2.50 a barrel for each of the next two years to $51 a barrel in 2017 and $50 a barrel in 2018 … Lower-for-longer is becoming a reality,” Flowers said.
In corporate news, Japan’s Toshiba was in the spotlight after the company’s board announced it would meet with other bidders on Wednesday, Reuters said. Western Digital and Foxconn were among the companies from which Toshiba will be reviewing offers, a source told Reuters.
Toshiba announced in June that a consortium led by the Innovation Network Corporation of Japan was the company’s preferred bidder for the sale of its chip unit. However, the company has been unable to secure an agreement with the INCJ-led group. Toshiba shares were up 0.97 percent.
Also in Japan, shares of Mitsubishi Motor gained 7 percent on the back of better-than-expected first quarter profits released Tuesday. The automaker recorded operating profits of 20.6 billion yen ($185.2 million) compared to an estimate of 15.10 billion yen, Reuters said. Mitsubishi shares were up 5.36 percent at 9:40 a.m. HK/SIN.
South Korea’s LG Display also reported second-quarter profits Tuesday after the market close. The company recorded operating profits of 804 billion won ($721 million) compared to 44.4 billion won from one year ago. LG Display share were off 2.13 percent.
Hong Kong-listed property stocks were once again responsible for moves in the markets, with Sunac China Holdings gaining 3.23 percent in early trade after being sold off in the previous session. Sunac shares fell around 7 percent on Tuesday after the property developer said it was raising $516.4 million in a share sale.
Other property stocks linked to an asset disposal deal involving Dalian Wanda also recorded gains. Dalian Wanda Hotel Development rose 3.8 percent and Guangzhou R&F gained 1.48 percent.
Meanwhile, shares of China Evergrande Group rallied 13.56 percent after the company announced in a filing on Tuesday that it was expecting its unaudited net profit to be triple the amount recorded one year ago.
Asian corporates reporting earnings today include South Korea’s Hyundai Motors, as well as Japan’s Line and Nintendo.
In currencies, the dollar index, which measures the dollar against a basket of currencies, firmed to trade at 94.130 at 9:39 a.m. HK/SIN. The index had recovered slightly in the overnight session after touching a fresh 13-month low.
Against the Japanese currency, the dollar fetched 112.01 yen, around its highest levels in more than a week. That compared to levels around the 111.1 handle seen earlier this week.
Stronger consumer confidence data released Tuesday and a narrow Senate vote to begin debate on the repeal of Obamacare in the U.S. were factors that contributed to the slight recovery in the dollar, National Australia Bank Director of Economics David de Garis said in a morning note.
Going forward, currency markets anticipated the end of the Federal Open Market Committee’s (FOMC) two-day meeting Wednesday U.S. time for signals about the Federal Reserve’s monetary policy plans.
Meanwhile the common currency gave up some gains after breaching the $1.17 level overnight — its strongest levels since August 2015, according to Reuters. The euro traded at $1.1640 at 9:40 a.m. HK/SIN.
Over in Australia, second-quarter CPI rose 1.9 percent on year compared to the 2.2 percent expected, Reuters said. Consumer prices rose 0.2 percent compared to the previous quarter — below the 0.4 percent forecast.
The Aussie dollar tumbled to trade at $0.7900 on the news, compared to levels around the $0.793 handle seen earlier in the session. The currency traded at $0.7905 at 9:38 a.m. HK/SIN.
Also on the economic calendar for Wednesday, Singapore industrial production data for the month of June is due at 1:00 p.m. HK/SIN.
Stateside, major U.S. indexes closed higher on Tuesday after several large companies, including Caterpillar and McDonald’s, announced quarterly results that beat analyst expectations.