Asian markets rise as Japan nuclear crisis eases
Monday, March 21, 2011; 12:34 AM
BANGKOK -- Asian markets were mostly higher Monday, buoyed by news over the weekend that Japan was making progress in its battle to control radiation leaks at a nuclear complex that was severely damaged in the March 11 earthquake.
Oil prices, meanwhile, jumped to near $103 a barrel in Asia after Libyan leader Moammar Gadhafi vowed a "long war" amid allied military strikes over the weekend in the OPEC nation.
South Korea's Kospi index was up 0.8 percent to 1,997.30 and Hong Kong's Hang Seng index rose 1.2 percent to 22,574.01. Australia's S&P ASX 200 was up 0.1 percent to 4,631.10. Japan's Nikkei index was closed for a public holiday after a week of dizzying drops and modest rebounds.
Benchmarks in Singapore, the Philippines and Taiwan also rose. Mainland China's Shanghai Composite Index was up 0.2 percent to 2,911.51. India's Sensex opened 0.3 percent lower to 17,830.22.
Markets headed upward even though the crisis in Japan was far from over. The World Bank said Japan may need five years in order to rebuild after the strongest earthquake in the country's history unleashed a towering tsunami that decimated the industrial northeast, causing $235 billion in damaged and likely killing more than 18,000 people.
On a positive note, the World Bank said it expected growth in Japan to pick up later this year "as reconstruction efforts, which could last five years, accelerate."
A number of analysts saw the volatile atmosphere in markets as an opportunity for bargain-hunting.
"Equities have been hit by Middle Eastern turmoil ... and now the Japanese earthquake. The bigger risk for the future is likely to be a further spike in oil prices," Citigroup Global Markets said in a report. "Overall, however, if these events leave the global economic recovery intact, as we expect, investors should look to buy."
"Our underlying emerging market strategy view is that, unless the effect of the earthquake, tsunami and nuclear crisis on the Japanese and other economies is so severe that the global economy slides back into recession, investors should look to buy on weakness," it said.
The governments of the world's seven major advanced economies last week agreed to jointly intervene in currency markets to prevent the yen from surging against the dollar. An overly strong yen could hurt Japan's exporters who will be crucial to Japan's ability to recover from the crisis.
The impact was immediate - the dollar rose above 81 yen on Friday after sliding as far as 76.53 yen, an all time low. The dollar was at 80.94 in Asia on Monday, down from 81.06 in Europe on Friday. The euro was little changed at $1.4167.
Also last week, the Japanese central bank tried to calm money markets by injecting 38 trillion yen ($470 billion) in emergency cash on top of its regular funding activities.
But another crisis - this one in the Middle East - threatened to shake the market's fragile confidence.
U.S. and allied forces launched a military campaign over the weekend in support of a U.N. resolution authorizing military action against Libya to protect civilians amid an internal rebellion against Gadhafi.
Benchmark crude for April delivery rose $2.13 to $103.26 a barrel in Asia. The contract fell $2 to settle at $100.75 a barrel on Friday. The prospect of higher oil prices pushed energy stocks higher. CNOOC, China National Offshore Oil Corp., China's largest offshore oil producer, rose 2.4 percent.
China Shenhua Energy Ltd., the country's biggest coal producer, rose 3 percent, as the crisis in Japan has raised concerns over the safety of nuclear energy worldwide and could cause governments to wean themselves off nuclear power.
Moody's Investors Service has warned that if oil prices remain around $100 a barrel, it will imperil the global economic recovery. Carmakers, airlines and agricultural companies would be hit the hardest. Economists think that oil prices above $130 could push the U.S. into another recession.
The Dow Jones industrial average gained 83.93 points, or 0.7 percent, to close at 11,858.52 on Friday. The Standard & Poor's 500 index rose 5.49, or 0.4 percent, to 1,279.21. The Nasdaq composite index gained 7.62, or 0.3 percent, to 2,643.67.