OPEC surprised skeptics with its first deal to cut output in eight years, sending oil rallying the most in eight months. Asian markets opened higher led by gains in energy shares, while the dollar rose on better-than-expected U.S. private payrolls data.
The Organization of Petroleum Exporting Countries will reduce output by 1.2 million barrels per day by January, the group said on Wednesday. Production will fall to 32.5 million barrels, in-line with the proposal announced in Algiers in September. Iran has been allowed to raise output to about 3.8 million barrels a day, while Russia agreed to unprecedented cuts to its own output.
Private Jobs Data Supports Dollar
U.S. equity markets closed mixed on Wednesday as gains in energy shares were offset by losses in technology stocks. The S&P 500 Index closed November with gains of 3.4 percent, its biggest monthly gain since July.
Private employers increased hiring in November and consumer spending rose last month, data that could convince the Federal Reserve to raise interest rates in its December 13-14 meeting.
The ADP National Employment Report showed that private payrolls increased by 216,000 this month, well above economists' expectations for a gain of 165,000 jobs.
Savings climbed to a seven-month high in October indicative of future spending by households.
The data along with prospects of an imminent rise in interest rates spurred the dollar. The Bloomberg Dollar Spot Index was little changed after it gained 0.5 percent on Wednesday.
U.S. Economy Expands
A survey conducted by the U.S. Federal Reserve indicated that the country's economy continued to expand led by retail sales, real estate, and business organisations.
The Fed's ‘Beige Book' released on Wednesday indicated that the outlook going ahead was ‘mainly positive,' with a slight upward pressure on prices.
Investors will be focussed on the non-farm payrolls data, scheduled to be released on Friday, which will provide further inputs for Fed's rate decision. Traders are pricing in a 100 percent chance of at least a quarter percentage point rise in interest rates in this month's meeting, according to futures rates tracked by Bloomberg.
Rally To Sustain?
The SGX Nifty Index was little changed at 8,247 as of 7:05 a.m, indicating a tepid start for Indian equities. Benchmark indices climbed to a three-week high on Wednesday led by a rebound in banking stocks.
Investors will watch out for auto sales data for the month of November, for more insight on how badly India Inc. has been hit by Narendra Modi government's November 8 decision to ban old Rs 500 and Rs 1,000 notes.
Traders will also react to the July to September quarter gross domestic product data, which showed that the economy grew less than expected 7.3 percent well before the currency curbs were announced. A Bloomberg survey of economists had forecast 7.5 percent growth in the quarter.
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