Asian stocks cheer OPEC deal

Stock markets in Asia cheer the OPEC deal and prospects of higher oil prices even though many Asian/EM nations are energy dependent and run trade deficits.

At the time of writing, Japan’s Nikkei was trading 2.3% or 426 points higher on the day at 18,730 levels. Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng were up 0.8% each. Meanwhile, Shanghai Composite added 0.68%.

US stocks clocked record highs after OPEC announced output cuts for the first time since 2008. The deal also calls for a drop in the non-OPEC supplies.

Oil prices rallied 9%, thus pushing the energy stocks higher in Europe and US. Energy counters strengthened in Australia and across Asia as well.

However, the gains in Asian/EM indices contradict fundamentals, which suggest a combination of strong US dollar, rising rates in the US and higher oil prices could worsen the trade deficit.