Asian shares firm, oil near two-month high after deeper output cut

By Hideyuki Sano

TOKYO (Reuters) – Asian stocks held firm on Friday as U.S. President Donald Trump’s rhetoric kept investors’ hopes up on a trade deal with China, while oil sat near two-month highs after producers led by Saudi Arabia and Russia agreed on further output cuts.

Japan’s Nikkei () rose 0.28% and MSCI’s broadest index of Asia-Pacific shares outside Japan () was up 0.19%. Australian shares () rose 0.24%, while South Korea’s Kospi () rose 0.57%.

Trump said on Thursday that U.S.-China trade talks are “moving right along,” striking an upbeat tone despite a lack of agreement over whether existing tariffs should be dropped as part of a deal.

Investors were hoping that the two sides will reach a compromise to at least avoid their worst fears – that the United States will go ahead with its final batch of tariffs on about $156 billion of Chinese exports.

Uncertainties over a deal have pushed some investors to the sidelines in recent sessions, while nervousness ahead of the release of U.S. payrolls data later in the day could also dampen trade on Friday.

Oil prices stood little changed near recent peaks after major oil exporting countries agreed on Thursday to cut output by an extra 500,000 barrels a day in the first quarter of 2020, after a nearly six-hour meeting on Thursday.

Details of the agreement and how the cuts will be distributed among producers still need to be ratified at a meeting in Vienna of OPEC and non-OPEC nations, or so-called OPEC+, on Friday.

“The cut of an extra 500,000 barrels a day was not priced into the market, so the cut will be positive for the market if it is carried out,” said Tatsufumi Okoshi, senior commodity economist at Nomura.

“But since OPEC countries haven’t fully complied with the existing cut, markets will probably have to wait to see how the cut will pan out,” he added.

U.S. West Texas Intermediate (WTI) crude () dipped 2 cents to $58.41 per barrel, but was not far off Thursday’s 2-1/2-month high of $59.12 per barrel.

The agreement coincided with the initial public offering (IPO) of state oil firm Saudi Aramco, which was priced at the top of its range, raising $25.6 billion in the world’s biggest IPO.

In the currency market, the British pound soared on growing confidence that next week’s election will give the Conservative Party the parliamentary majority it needs to deliver Brexit, ending near-term uncertainty.

Sterling spiked to a seven-month high of $1.3166 on Thursday and last stood at $1.3157 , up 1.6% so far this week. It hit 2-1/2-year highs versus the euro.

The euro stood at $1.1107 (), near a one-month high of $1.11165 set on Wednesday, helped by firmer euro zone economic data.

That helped push the () to a one-month low of 97.356 on Thursday. The index last stood at 97.386.

Against the yen, the dollar traded at 108.73 yen , having slipped slightly the previous day.

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