Daily Times

LONDON: Asian and European stock markets rallied Thursday and energy-linked currencies advanced after OPEC’s shock deal to trim oil output.

The announcement Wednesday lit a fire temporarily under oil prices, sending petroleum-linked shares surging on Wall Street and later across Asian and European stock markets.

Despite crude later falling back on doubts about the cartel following up on its deal, energy firms managed to hold onto their strong share price gains.

“Even though there still have to be doubts whether the OPEC deal will ever actually be implemented, Royal Dutch Shell and BP are at the top of the FTSE 100 leader board” with gains of 4.0 and 5.3 percent respectively, noted Russ Mould, investment director at AJ Bell.

Around 1045 GMT, London’s benchmark FTSE 100 was up 1.0 percent overall.

In the eurozone, the Paris CAC 40 jumped 1.0 percent and Frankfurt’s DAX 30 gained 0.7 percent compared with Wednesday’s closing levels.

An oil-price rally fuelled by OPEC’s deal to cut crude output fizzled out Thursday with analysts doubting the cartel’s ability to seriously tackle a supply glut.

Exact details of the deal remain to be agreed and analysts said markets will now wait to see whether non-OPEC producers such as Russia, the United States and Canada will make cuts of their own.

Russian markets climbed Thursday thanks to the temporary surge in energy prices.

And Russia’s ruble, which lost nearly half its value in 2014, strengthened slightly. Other energy and commodity-linked currencies, such as the Malaysian ringgit and Canadian dollar, forged higher against the greenback.

“OPEC’s production cut offers support for oil-related currencies,” noted Lee Hardman, analyst at Bank of Tokyo-Mitsubishi UFJ.

Elsewhere, the euro was steady against the dollar, which in turn gained versus the safe haven yen.

Hardman added that the brief oil-price surge “helped to improve investor risk sentiment, lifting global equity markets, particularly shares of energy companies”.

Stock markets in the energy-rich Gulf states meanwhile made solid gains with the Saudi bourse, the largest in the Middle East, up 0.76 percent by mid-session.

In Asia, the share price of Chinese energy giant CNOOC piled on more than five percent and PetroChina added three percent, while Sydney-listed Woodside Petroleum won more than seven percent.

Elsewhere, Germany’s banking sector was in sharp focus as the country’s second largest lender Commerzbank said Thursday it plans to cut 9,600 jobs, or one-fifth of its workforce, by 2020 and withhold dividends to pay for a 1.1-billion-euro ($1.23-billion) restructuring.

Commerzbank shares were down 1.1 percent in afternoon deals, while Deutsche Bank rebounded after the troubled lender’s share price sank to a record-low earlier this week.

Wall Street stocks dipped early Thursday as the market weighed a deal by OPEC oil producers to limit output and somewhat better US economic growth data.

Briefing.com Patrick O’Hare said investors were skeptical of Wednesday’s agreement in Algiers by oil producers to limit output, saying “talk is cheap without action.”

Still, Anadarko Petroleum and ConocoPhillips were among energy shares that moved higher early Thursday. Dow member Caterpillar, which sells machinery to the oil industry, rose 2.3 percent.

The Commerce Department upgraded its estimate of second-quarter growth to 1.4 percent from 1.1 percent.

About 45 minutes into trade, the Dow Jones Industrial Average was at 18,338.77, down less than 0.1 percent.

The broad-based S&P 5000 lost 0.1 percent at 2,169.89, while the tech-rich Nasdaq Composite Index fell 0.3 percent to 5,300.37.

PepsiCo rose 1.4 percent as it reported that net income for the third quarter more than tripled to $2.0 billion.

Wells Fargo slid 0.6 percent as the state of California, where the bank is based, suspended significant business with it, including barring the use of Wells Fargo as an underwriter on negotiated sales of California state bonds.

Wells Fargo chief executive John Stumpf was expected to face tough questions at a Capitol Hill hearing.

Media giants CBS and Viacom rose 2.5 percent and 1.4 percent respectively after the family that controls both said the two companies should be remerged. A letter released by Sumner Redstone and his daughter Shari Redstone said the boards of the two companies should consider bringing together the firms that broke up in 2005.

Dow member McDonald’s gained 0.6 percent after boosting its quarterly dividend by six percent.