By Ese Erheriene and Kosaku Narioka

Nikkei back into positive territory after quake triggers early drop

Asian shares were broadly higher early Tuesday, with the Australian market rising to a one-month high, as oil prices rallied on expectations that key oil-producing countries will agree to a deal to slash production.

The S&P/ASX 200 gained 1.3%, while Hong Kong's Hang Seng Index was also up 1.3%, Korea's Kospi added 0.9%, and the Shanghai Composite Index rose 0.7%.

Stocks in Japan were initially down slightly, following a 6.9-magnitude earthquake that struck off the eastern coast of Japan early Tuesday, though the impact appeared limited and the Nikkei Stock Average later reversed to a gain of 0.3%.

Overnight in the U.S., the S&P 500, Dow Jones Industrial Average and Nasdaq Composite climbed to a trifecta of records (http://www.marketwatch.com/story/wall-street-stocks-set-to-struggle-for-direction-in-a-holiday-shortened-week-2016-11-21) as stocks continued their post-election rally.

Oil prices also rose to a three-week high as investors stuck to bets that the Organization of the Petroleum Exporting Countries will reach a production deal at its meeting on Nov. 30. Brent, the global crude-oil benchmark , was recently up 0.9% at $49.36 a barrel.

"Reports of the OPEC technical committee making progress in the first of their two-day meeting raised hopes of an output agreement," said Jingyi Pan, a market strategist at IG Markets, in a note. "Jitters should nevertheless be expected ahead of the meeting at the end of the month, as it represents a huge event risk."

Markets in the region that are more dependent on oil production outperformed, including Australia and Singapore -- home to many companies that serve the oil-and-gas industry. The FTSE Straits Times Index was last up 0.6%.

Among energy stocks in Australia, Oil Search (OSH.AU) was up 2.4%, Woodside Petroleum (WPL.AU) added 2.3%, and Santos Ltd. (SSLTY) rose 3.8%. Elsewhere, Japan Petroleum Exploration (1662.TO) surged 2.8% and Hong Kong-listed Cnooc (0883.HK) jumped 4%.

In Japan, gains were mild as recent feverish buying of local stocks cooled, with the yen strengthening slightly against the U.S. dollar. Helped by the prospects of stronger U.S. economic growth and earlier yen weakness, the Nikkei entered bull market territory on Friday, with the index up 20% from its recent low in June. On Monday, the index closed at its highest level since Jan. 6.

Hopes over U.S. President-elect Donald Trump's fiscal stimulus plans led stocks to gain globally amid expectations of looser regulation and higher interest rates.

Yet market participants will likely become more cautious as investors focus on some of the more protectionist aspects of Mr. Trump's policies, said Tomoichiro Kubota, senior market analyst at Matsui Securities. "So far the market [has] only focused on the positives," he said.

Trump said Monday he would issue an executive order on the first day of his presidency notifying 11 other countries that the U.S. was pulling out of the proposed Trans-Pacific Partnership.

However, market participants will likely become more cautious as investors focus on some of the more protectionist aspects of Trump's policies, Tomoichiro Kubota, senior market analyst at Matsui Securities, said. "So far the market [has] only focused on the positives," he added.

"TPP isn't yet fully functional, so if the U.S. is backing out now, we have other trade deals available," said Hao Hong, chief strategist andco-head of research at Bocom International. "In the near term, the market tends to overlook this kind of longer-term stuff."

Meanwhile, analysts expect the market impact from Tuesday's earthquake to be limited, though shares of Japan Airlines were down 0.2% amid the cancellation of domestic flights operating to the eastern city of Sendai.

Japan Airlines Co. (9201.TO) early Tuesday suspended 10 flights from Sendai airport and two other airports in northern Japan. All Nippon Airways, the airline unit of ANA Holdings, delayed 16 mostly Sendai-bound flights, affecting around 1,500 passengers.

Looking ahead, the market will be watching for home-sales data out of the U.S., as the case for a rise in local interest rates builds. According to CME Group's FedWatch tool, the probability of a rate increase at the Federal Reserve's meeting next month is above 95%.

-- Megumi Fujikawa contributed to this article.

(END) Dow Jones Newswires

November 22, 2016 01:51 ET (06:51 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.