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Oil Leads Commodities Lower as Stocks Slide While Ruble Tumbles

Monday, 01 Dec 2014 08:01 AM

Oil led commodities to a five-year low as raw-materials companies slid the most in a global stock rout while the ruble weakened to a record. Standard & Poor’s 500 Index futures fell after U.S. holiday spending slowed.

West Texas Intermediate crude declined 0.8 percent to $65.61 a barrel at 7:06 a.m. in New York, after reaching $63.72, the lowest since July 2009. The MSCI All-Country World Index dropped 0.3 percent and S&P 500 futures lost 0.4 percent. Russia’s ruble depreciated 3.6 percent against the dollar and Australia’s currency retreated to a four-year low. Copper fell 1 percent to the lowest levvel since 2010.

A gauge of government bond yields around the world fell to an 18-month low as collapsing oil prices damped inflation expectations and pushed the Bloomberg Commodity Index to the lowest level since 2009. German manufacturing unexpectedly shrank last month and a Chinese factory gauge fell to an eight- month low, data showed today. U.S. consumers cut spending by an estimated 11 percent over the post-Thanksgiving weekend before Cyber Monday’s e-commerce sales.

“For investors who are long commodities, it’s a very painful place to be,” Nic Brown, head of commodities research at Natixis SA in London, said by phone today. “As you exit your energy, you will inevitably be getting out of a lot of other stuff as well. Energy still makes up a very significant proportion of the big indices.”

Oil extended its retreat after capping its biggest monthly loss in about six years in November as the Organization of Petroleum Exporting Countries signaled the group will leave it to the market to reduce a global glut.

Brent Slides

Brent for January settlement fell 0.6 percent to $69.72 a barrel on the London-based ICE Futures Europe exchange, after reaching $67.53, the lowest since October 2009. Prices declined 18 percent last month and are 38 percent lower in 2014.

Gold for immediate delivery rose 0.9 percent to $1,174.55 an ounce, after falling as much as 2.1 percent to the lowest level since Nov. 7. A proposal that would have required the Swiss National Bank to hold at least 20 percent of its assets in bullion was voted down in a referendum yesterday. Silver rose 2.1 percent after dropping as much as 6.7 percent.

The Stoxx Europe 600 Index declined 0.4 percent, with more than two shares declining for every one that advanced. Total SA and Royal Dutch Shell Plc more than 2.3 percent.

Vodafone Group Plc lost 2.4 percent after people with knowledge of the matter said the British phone company is considering a combination with John Malone’s Liberty Global Plc. The cost of insuring Vodafone’s debt rose seven basis points to 65 basis points.

Altice Talks

Altice SA increased 5.5 percent as it entered exclusive talks to acquire Oi SA’s Portuguese assets. Gagfah SA jumped 12 percent as Deutsche Annington Immobilien SE agreed to buy the German property company. Deutsche Annington dropped 3.5 percent.

EON SE advanced 4.2 percent. Germany’s biggest utility will spin off conventional power generation and set a new dividend policy.

The MSCI Emerging Markets Index slid 1.4 percent, the most since Oct. 16. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong decreased 2.9 percent. In Hong Kong, police began clearing roads leading to government offices after a night of tussles with pro-democracy protesters who are calling for free elections in 2017.

China Slowdown

China’s official factory index fell to 50.3 for November, below the 50.5 reading projected by economists, while a private gauge from HSBC Holdings Plc and Markit Economics came in at 50, the border between expansion and contraction.

The Shanghai Composite Index declined for the first time in eight days, slipping 0.1 percent from a three-year high.

The ruble tumbled to 52.35 per dollar on concern lower prices will drive the world’s biggest energy exporter’s economy into a recession. Credit-default swaps on Russia’s government debt climbed for a sixth day, increasing 26 basis points to 340 basis points, the highest since July 2009.

Dubai led equity markets in the Gulf region lower as Emaar Properties PJSC, the emirate’s largest stock, traded without the right its next dividend. The DFM General Index declined 2.2 percent, bringing the drop since it peaked on Sept. 3 to 19 percent.

Aussie Drops

The plunge in oil prices is dividing the foreign-exchange market into winners and losers. The Aussie dollar plunged as much as 1.1 percent to 84.17 U.S. cents today, the lowest since July 2010. The Bloomberg-JPMorgan Asia Dollar Index also fell to a four-year low as the ringgit weakened 1.5 percent.

The yen reversed losses after dropping to a seven-year low of 119.14 per dollar immediately after Moody’s Investors Service cut Japan’s credit rating. It gained 0.1 percent to 118.47 per dollar.

Government bonds are gaining amid the selloff in crude. The average yield among securities in the Bank of America Merrill Lynch World Sovereign Bond Index dropped to 1.59 percent at the end of last week, the lowest level since May 2013. Australian 10-year yields declined below 3 percent today for the first time in two years. Rates on European bonds including German and French securities fell to record lows.

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Oil led commodities to a five-year low as raw-materials companies slid the most in a global stock rout while the ruble weakened to a record.
oil, stocks, market, commodities
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2014-01-01
Monday, 01 Dec 2014 08:01 AM
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