HONG KONG (NewsRise) -- Hong Kong shares closed at a one-week high on Tuesday as a rally in oil prices and a record high for stocks on Wall Street lifted investor sentiment. Energy producers and property developers led the broad-based gains.
The benchmark Hang Seng Index rose 1.4% to 22,678.07, with 45 of its 50 constituents climbing. Oil explorer CNOOC jumped 5.2% to HK$10.24, the most since April, and was the top gainer on the gauge, while PetroChina advanced 3.9% to HK$5.40. The S&P 500 Index reached an all-time high on Monday amid expectation that major oil producers will agree to cut output next week. The Shanghai Composite Index climbed 1% to 3,249.58, its highest close since January.
The rally follows a period of volatility for regional markets, including Hong Kong, as the dollar and U.S. bond yields climbed amid speculation that U.S. President-elect Donald Trump's spending plans will boost inflation, prompting the Federal Reserve to raise rates at a faster clip than previously anticipated. Tuesday's advance also came on the back of investors paring their bearish bets, according to Andrew Sullivan, managing director for sales trading at Haitong Securities International in Hong Kong.
"People are just slightly cautious about being short because the market's continued to grind higher,'' said Sullivan. "I think the reality is, everyone expects a Fed rate hike in December," and the only question was whether that increase will be just 25 basis points or 50 basis points, he added.
Other equity markets in the region also participated in the day's upbeat trading, with South Korea's Kospi closing 0.9% higher, while Taiwan's Taiex rose 1% and India's Sensex advanced 0.6%.
China Resources Land gained 2.6% to HK$19.06 and China Overseas Land & Investment increased 1.8% to HK$22.45 as they pared some of their recent losses. The two stocks are still down at least 15% so far in 2016, compared with a loss of 8.2% for the Shanghai Composite and a 3.5% gain for the Hang Seng Index. Cheung Kong Property Holdings rose 1.9% to HK$51.70.
Chinese developers have been under pressure over the past few weeks after local governments in China put curbs to cool soaring prices amid increased speculative activity in the real estate market.
"The party may be over for developers and 2017 is expected to be a lot more challenging,'' with the industry's total contracted sales declining by 5% to 10%, after an estimated 20% growth for 2016, Cindy Huang, a credit analyst at S&P Global Ratings, said in a teleconference on Tuesday.
China Shenhua Energy added 3.7% to HK$16.28 after an index tracking coal miners rose 2.8% on Tuesday. Coking coal futures traded on the Dalian Commodity exchange jumped more than 8%.
Consumer prices in Hong Kong rose 2.1% in October from a year earlier after taking out the effect of one-time relief measures provided by the government, compared with 2.3% in September, according to official data released after markets closed on Tuesday.
WH Group rose 0.2% to HK$6.25. Its unit Smithfield Foods agreed to buy the parent of the Farmer John and Saag's Specialty Meats brands and some other assets in the U.S. for $145 million in cash from Hormel Foods Corp.
Chow Tai Fook Jewellery Group shares climbed 2.7% to HK$5.80. After markets closed, the company said its half-yearly profits fell to HK$1.22 billion from HK$1.56 billion.
--V. Phani Kumar