Weak U.S. Holiday Sales, Oil Plunge Wreaks Havoc in Russia, Mid-East Markets

Nichole Harper
01 Dec, 2014
New York City

The plunge in crude oil price travelled around the global financial markets as the decline in oil price continued and wreaked havoc in financial asset prices of oil producing nations. U.S. holiday shopping over the weekend was sharply lower than a year ago.

[R]12:50 PM New York – The plunge in crude oil price travelled around the global financial markets as the decline in oil price continued and wreaked havoc in financial asset prices of oil producing nations. U.S. holiday shopping over the weekend was sharply lower than a year ago.[/R]

Stocks on Wall Street edged lower and investors focused on the beginning of holiday sales in the U.S. and weaker than anticipated Chinese manufacturing growth data.

So called Black Friday sales in the U.S. over the weekend surprised many market watchers after the retail industry association reported sales plunged 11% in the weekend from a year ago.

Retail and consumer technology related stocks declined in New York trading.

Official and a private survey of manufacturing industry in China suggested that the growth in the sector is declining.

The two surveys released over the weekend and today showed that manufacturing sector driven by exports is struggling to hold the growth rate among medium and smaller companies.

The ongoing decline in oil price travelled around the global markets and market indexes in Australia, Japan, Middle East and Europe were impacted by the dramatic fall.

Russian ruble dropped more than 6% in Monday’s trading and currencies in Iran, Venezuela, Nigeria and Australia weakened.

Russian ruble has dropped 40% in the year so far and traded as low as 54 before recovering to close at 52 against the U.S. dollar. Ruble is the second-worst performing currency in the world.

Russia’s central bank also intervened in the market and also announced measures to create a free-float in the ruble linked to oil price. Crude oil is 68% of Russia’s exports and oil revenues are about 50% of federal government revenues.

Iran’s currency has plunged more than 80% in the year so far and Nigerian Naira has lost 2.5% and declined to a record low of 183.05 against one dollar.

On Wall Street trading, Tollbooth Index slipped 0.8% or 82.42 to 9,983.34.

S&P 500 index slipped 14.31 or 0.7% to 2,053.24 and the Nasdaq Composite Index dropped 59.85 or 1.2% to 4,732.34.


U.S. Movers

Avolon Holdings, the Ireland-based aircraft leasing company launched an initial public offering valued at up to $1.86 billion. Trading will starts in to the next two weeks.

The company forecasted the sale of existing stock to be priced between $21 per share and $23 per share.

Cott Corporation ((COT)) dropped 2.1% or 14 cents to $6.41 after the beverages maker’s subsidiary plans to issue convertible bonds due in 2019 for aggregate principal amount of $615 million.

European Markets

In London trading, FTSE 100 index slumped 0.8% or 56.60 to 6,666.02 and in Frankfurt the DAX index fell 0.2% or 25.31 to 9,955.54.

In Paris, CAC 40 index slid 0.3% or 12.59 to 4,377.59.

In the European corporate news, Altice agreed to acquire Portugal Telecom SGPS S.A. from Brazilian wireless carrier Oi S.A. for €7.4 billion. E.ON plans to split into two companies. Balfour Beatty received £1 billion non-binding proposal from John Laing Infrastructure Fund. Vodafone plans to acquire Blinkbox.

Altice SA surged 6.2% to €57.45 after the France-based pay television and broadband internet service provider agreed to acquire Portugal Telecom SGPS S.A. from Brazilian wireless carrier Oi S.A. for €7.4 billion or $9.2 billion.

The transaction is expected to close before the end of this month.

E.ON SE jumped 3.7% to €14.79 after the Germany-based energy solution provider plans to split into two companies to focus on renewable, distribution networks while new company will focus on energy production and trading businesses.

Balfour Beatty Plc climbed 4.4% to 191.40 pence after John Laing Infrastructure Fund confirmed a non-binding proposal to the U.K.-based infrastructure developer for about £1 billion.

The company said the board will review the proposal and the company is open to “value creation opportunities” for shareholders.

Asian Markets

Indexes in Japan extended gains and the Topix index increased to a new six-year high and airlines surged after oil price dropped to a new four-year low.

Moody’s lowered Japan government credit rating by one notch and the yen declined to a seven-year low.

Stocks in Tokyo gained and the yen regained its downward trend after a flood of economic news in Asia were overshadowed by the sharp plunge in oil price.

The latest manufacturing survey from Chinese government showed slowing growth in November and airlines surged after oil dropped at a new four-year low.

The Nikkei 225 Stock Average gained 130.25 or 0.7% to 17,590.10 and the broader Topix index jumped 11.31 or 0.8% to 1,421.65.

The yen slipped 0.5% to 118.27 against one dollar.

Moody’s Investors Service lowered credit rating of Japan government by notch to A1 and the U.S. based rating service company said there are uncertainties regarding the impact of Japan’s growth initiatives and whether the new government will be able to meet its deficit-reduction target.

The yield on 10-year Japanese government bond was nearly unchanged and gained 0.5 basis point to 0.43%, the lowest since April 2013 when the yield had dropped to as low as 0.315%.

In Mumbai trading, the Sensex Index slipped 134.37 or 0.5% to close at 28,559.62. The CNX Nifty slid 17.85 or 0.2% to 8,570.40.

Maruti Suzuki India Limited jumped 1.6% to Rs 3,389.65 after the automaker said November total sales climbed 19.5% to 110,147 units compared to 92,140 units a year ago period.

Domestic sales climbed 17% to 100,024 units and exports rose 52.7% to 10,123 units from a year ago period.

Mahindra & Mahindra Limited dropped 2.1% to Rs 1,296.10 after the tractor maker said November total tractor sales tumbled 34% to 15,333 units compared to 23,119 units in same period last year.

In November, domestic tractor sales plunged 36% to 14,207 units compared to 22,343 units same period a year ago.

Exports surged 45% to 1,126 units compared to 776 units in a same period last year.

TVS Motor Company Limited soared 3% to Rs 236.05 after the automobile maker reported November total sales surged 36% to 220,046 units compared to 161,908 units same period a year ago.

Total two wheeler sales in November climbed 36% to 210,979 units from 155,604 units same period last year. Domestic two wheeler sales jumped 33% to 179,453 units from 135,218 units a year ago period.

Total exports sales soared 55% 39,215 units compared to 25,338 units a same period last year. Two wheelers exports sales surged 55% 31,526 units from 20,386 units a year ago period.