HONG KONG – Energy companies led a rally in Asian stock markets Thursday as investors welcomed news that OPEC nations planned to cut oil production for the first time in eight years in an effort to reduce a global glut.
KEEPING SCORE: Japan’s benchmark Nikkei 225 index jumped 1.7 per cent to 16,739.06 and South Korea’s Kospi advanced 0.9 per cent to 2,070.65. Hong Kong’s Hang Seng rose 0.3 per cent to 23,693.37 and the Shanghai Composite Index gained 0.4 per cent to 3,000.45. Australia’s S&P/ASX 200 climbed 1.1 per cent to 5,470.00 Indexes in India, Taiwan, Singapore, Indonesia, Thailand, the Philippines and New Zealand also rose.
CRUDE CUT: Shares of Asia-listed energy companies surged, after OPEC members struck a preliminary deal to curb output at a meeting in Algeria. The Organization of the Petroleum Exporting Countries, whose member economies have been hit by depressed oil prices because of excess global production, overcame long-running disagreements and agreed to limit production to between 32.5 million and 33 million barrels per day. Japan Petroleum Exploration Co. surged 9.7 per cent, Chinese oil producer CNOOC jumped 6 per cent and Australia’s Woodside Petroleum leaped 7.9 per cent.
MARKET INSIGHT: Analysts were skeptical about whether the OPEC cut would provide a long-term boost because it did nothing to address weak demand. “For oil to see a sustainable rally from here, demand side indicators need to be represented better,” said Nicholas Teo, trading strategist at KGI Fraser Securities in Singapore. “So far though, nothing of that sort has appeared in the horizon.”
ENERGY: Benchmark U.S. crude oil futures leaped after the OPEC announcement, although momentum stalled as traders grew skeptical of the deal’s lack of details. Crude oil rose 8 cents to $47.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract surged $2.38, or 5.3 per cent, to settle at $47.05 a barrel on Wednesday. Brent crude, the international standard, edged up 3 cents to $49.27 a barrel in London.
WALL STREET: Major U.S. benchmarks finished higher on gains from energy companies. The Dow Jones industrial average rose 0.6 per cent to close at 18,339.24. The Standard & Poor’s 500 index added 0.5 per cent to 2,171.37. The Nasdaq composite edged up 0.2 per cent to 5,318.55.
CURRENCIES: The dollar rose to 101.61 yen from 100.93 yen in late trading Wednesday. The euro inched up to $1.1229 from $1.1223.