Asian shares edge higher, with oil prices extending losses

Asian shares reversed early losses to edge higher on Monday, following positive weekend news regarding U.S.-North Korea relations. Investors also digested the extended slide in oil prices after top producers indicated output could increase.

The Nikkei 225 eked out gains of 0.05 percent and the broader Topix edged down by 0.2 percent, with the oil subindex falling 4.24 percent amid weakness in oil prices.

South Korea’s Kospi rose 0.64 percent as weekend developments gave rise to optimism that a U.S.-North Korea meeting in June could take place despite being canceled last week.

Gains in the benchmark came as steelmakers and other manufacturing names advanced: Posco added 3.03 percent and Hyundai Steel jumped 16.7 percent. Large cap technology name, however, traded lower.

Greater China markets tracked higher, with the Hang Seng Index gaining 0.56 percent and the Shanghai composite adding 0.18 percent.

Australia’s S&P/ASX 200 bucked the trend to ease 0.57 percent as declines in energy and materials weighed on the broader index. Woodside Petroleum and Beach Energy tumbled 3.56 percent and 9.01 percent, respectively.

That came as oil prices extended declines after coming under pressure last week following news that top producers could ease quotas on existing production cuts. Brent crude futures slid 1.87 percent to trade at $75.01 per barrel and U.S. West Texas Intermediate eased 2.47 percent to trade at $66.20 after settling 4 percent lower in the last session.

“We’ve been calling for oil prices this year to be relatively range-bound around the mid-$60s level and I think that’s a level that OPEC’s relatively comfortable with,” Hannah Anderson, global market strategist at J.P. Morgan Asset Management, told CNBC’s “Squawk Box.”

“What they’re not comfortable with is prices getting high enough that it made sense for those marginal shale producers to come back online, which is really what drove prices down in the first place in 2015,” Anderson said.

Investors also digested geopolitical developments over the weekend, including a meeting between the U.S. and North Korean delegations on Sunday.

The talks on Sunday followed a Saturday meeting between South Korean President Moon Jae-in and North Korean leader Kim Jong Un. That, in turn, came after U.S. President Donald Trump said he canceled a planned meeting with Kim in June last Thursday, although the White House later said it was still making preparations “should the summit take place.”

MSCI’s broad index of shares in Asia Pacific excluding Japan rose 0.35 percent in afternoon Asia trade.

The gains in Asia followed the mostly lower close stateside on Friday amid a mix of positive corporate earnings releases and geopolitical headlines involving North Korea.

Meanwhile, the euro firmed by some 0.5 percent after news that Italy’s president had not approved a nominee for the position of economy minister. The common currency traded at $1.1713 at 12:30 p.m. HK/SIN, compared to Friday’s close of $1.1650.

The dollar index, which tracks the greenback against several peers, stood at 93.907. Against the yen, the dollar fetched 109.37.

There aren’t many data releases from the region expected on Monday, with just Hong Kong April trade data expected at 4:30 p.m. HK/SIN. Looking ahead, China is expected to release official Purchasing Managers’ Index data on Thursday.

Meanwhile, markets in the U.S. and U.K. will be closed on Monday for holidays.

Source: CNBC