Asia: Stocks rise with ringgit as Opec deal boosts oil; yen falls

[WELLINGTON] Asian stocks rose with Malaysia's ringgit and oil climbed to a three-week high after Opec members agreed a preliminary deal to cut crude production for the first time since 2008.

Regional energy shares jumped by the most in six months and led gains on the MSCI Asia Pacific Index, which is set for its best quarter in more than four years. The ringgit was the best performer among Asian currencies as prospects brightened for Malaysia, Asia's only major net oil exporter, and the yen weakened for a third day.

US crude rallied above US$47 a barrel following a 5.3 per cent surge on Wednesday. Australian government debt tracked declines in Treasuries amid concern higher energy prices will stoke inflation.

Markets were taken aback by the oil-output deal, with Saudi Arabia and Iran wrong-footing traders who had expected a continuation of the pump-at-will policy the Organisation of Petroleum Exporting Countries adopted in 2014.

Opec agreed to trim production to a range of 32.5 million to 33 million barrels per day following an informal meeting in Algiers.

Many of the details are still to be worked out and the group won't decide on targets for each member country until its next gathering at the end of November. Concern over a global glut has weighed on crude prices for at least the past two years.

"The energy sector is going to be a key contributor to the rally we see after the Opec decision," said Tony Farnham, a strategist at Patersons Securities Ltd. in Sydney. "All we've seen at this stage is the intention to do something, I'd like to see it more concrete and then still they have to abide by it. But, it is the first step."

STOCKS

The MSCI Asia Pacific Index gained 0.7 per cent as of 11.08am Tokyo time, extending its quarterly advance to 10 per cent. A gauge of energy shares surged 3.6 per cent as Santos and Inpex Corp jumped more than 7 per cent.

"Opec's decision to curtail production wasn't expected, and now crude prices will likely head towards a range of US$50 to US$60 per barrel from US$40 to US$50 per barrel, which will ease global deflationary concerns," said Nobuyuki Fujimoto, a senior market analyst at SBI Securities in Tokyo.

Futures on the S&P 500 Index added 0.1 per cent, having risen 0.5 per cent on Wednesday as investors weighed the Opec deal and comments from Federal Reserve officials.

Fed Chair Janet Yellen told lawmakers that the majority of the central bank's policy-setting group sees an interest-rate increase as likely this year, while Chicago Fed President Charles Evans said an extended period of low borrowing costs will leave less room to navigate future economic shocks. Yellen is scheduled to speak again on Thursday, as are regional Fed chiefs for Atlanta, Minneapolis and Philadelphia.

Currencies The ringgit strengthened as much as 0.9 per cent versus the dollar, leading gains among the currencies of oil-exporting nations. Canada's dollar rose 0.1 per cent following a 0.9 per cent advance on Wednesday and the Norwegian krone built on the last session's 1 per cent jump.

Mexico's peso held near a two-week high before a monetary policy review on Thursday, with most economists predicting interest rates will be raised.

Taiwan also has a central bank meeting and its currency strengthened 0.5 per cent from Monday's close as trading resumed following a hurricane. Just under half of the economists in a Bloomberg survey forecast the island's central bank will cut borrowing costs.

The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, was little changed near its lowest level in more than two weeks. The yen slid 0.7 per cent, the biggest loss among major currencies.

COMMODITIES

Crude oil rose 0.3 per cent to US$47.20 a barrel, after jumping on Wednesday by the most since April. The lower end of Opec's production target equates to a nearly 750,000 barrels-a- day drop from what the group said it pumped in August.

"The cut is clearly bullish," said Mike Wittner, head of oil-market research at Societe Generale SA in New York. "The number of actual barrels that will be taken off the market is unclear. What's much more important is that the Saudis appear to be returning to a period of market management."

Tin gained 0.7 per cent to trade just shy of US$20,000 a metric ton, a level last seen in early 2015. The metal used for solder in electronics has jumped 17 per cent this quarter, the best performance on the London Metal Exchange, as warehouse stockpiles fell to the lowest since 2008. Nickel and lead rose more than 1 per cent, leading the day's gains among industrial metals.

BLOOMBERG