Oil at 5-year Low on Merger Monday, Weak European Markets

Nichole Harper
08 Dec, 2014
New York City

Market indexes on Wall Street traded lower and crude oil futures declined nearly 4% to a five-year low. China reported record trade surplus in November partly on the cheaper oil and commodities imports and buyers delay oil purchase on the prospect of weaker oil.

[R]12:40 PM New York – Market indexes on Wall Street traded lower and crude oil futures declined nearly 4%. China reported record trade surplus partly on the cheaper oil and commodities imports.[/R]

Stocks on Merger Monday traded lower and crude oil prices fell nearly 4% and China reported yet another monthly record trade surplus.

On Wall Street trading, Tollbooth Index slid 0.1% or 10.89 to 9,985.01.

S&P 500 index fell 2.24 or 0.1% to 2,073.13 and the Nasdaq Composite Index edged up 0.38 or 0.01% to 4,780.72.

Crude oil futures declined 3.7% or $2.45 to $63.39 a barrel and Brent Crude Oil futures fell 4% or $2.82 to $66.25 a barrel.

China’s Record Trade Surplus in November

Exports to the U.S. increased only 2.6% from the sharp rise of 10.9% in October and exports to the European Union increased 4.1%, matching the increase in the last month.

China’s General Administration of Customs reported trade surplus in November soared to record $54.47 billion surpassing the earlier record surplus set in $49.87 billion in August.

Exports in the month jumped 4.7% and import plunged 6.6% from a year ago month.

China imported $16.4 billion of crude oil in November, lower than the import of $18.4 billion a year ago month. Chinese companies are also delaying the import of oil on the prospect of cheaper oil price, forcing the international oil prices even further down.

U.S. Movers

The Blackstone Group LP ((BX)), the financial advisory service provider agreed to sell its Northern California portfolio of 26 office buildings for $3.5 billion to Los Angeles-based Hudson Pacific Properties Inc.

Merck & Co., Inc ((MRK)), the pharmaceuticals maker agreed to acquire Cubist Pharmaceuticals Inc for $102 a share, a 25% premium from Friday’s closing price or for about $9.5 billion.

The acquisition is expected to close in the first-quarter of 2015.

Cubist stock surged 36% as much as $74.36 before the regular market trading hours began.

McDonald''s Corporation ((MCD)), the quick service restaurant operator announced global comparable sales in November decreased 2.2%. System-wide sales in the month plunged 6%.

The company said comparable sales in the U.S. declined 4.6% and comparable sales in Europe slumped 2% while sales in Asia/Pacific, Middle East and Africa dropped 4%.

European Markets

In London trading, FTSE 100 index slipped 0.8% or 55.35 to 6,687.49 and in Frankfurt the DAX index fell 0.4% or 42.42 to 10,044.70.

In Paris, CAC 40 index slipped 0.7% or 30.52 to 4,388.96.

In the European corporate news, Air France KLM dropped on November traffic update. Cupid agreed to sell its last dating operating business for £3 million.

The Burkard family agreed to sell its 16.1% stake and control of voting rights in Sika AG to Saint-Gobain agreed for 2.75 billion Swiss francs.

Air France KLM SA, the France-based airliner reported traffic in November increased 0.4% to 17.40 billion while available seat kilometers fell 1.3% to 21.28 billion from the same period a year-ago.

Load factor for the month jumped 1.4% to 81.8 but cargo traffic in the month declined 3.6% and load factor dropped 2.3 percentage points.

Compagnie de Saint Gobain SA, the France-based building products maker agreed to acquire controlling voting rights and 16.1% held by the Burkard family in Switzerland-based construction chemicals maker Sika AG for 2.75 billion Swiss francs or $2.81 billion.

The deal between the founding family and France based company was done without the consent of management at Sika and Chief executive at the chemical maker threatened to quit.

Asian Markets

Market indexes in Tokyo advanced for the seventh day in a row and Japan said third-quarter economic contraction was deeper than the earlier estimate.

Yen weakened and current account surplus narrowed in October. Japan is scheduled for national election on December 14.

The Cabinet Office revised higher its estimate of third-quarter contraction of 1.9% annual rate from the earlier estimate last month of 1.6%.

The largest than expected downward revision was driven by higher-than-expected decline in consumer spending on the rise in sales tax and weaker-than-expected decline in business investments.

In the second-quarter, Gross Domestic Product tumbled 7.1% from a year ago quarter.

Revised business spending in the third-quarter fell 0.4% compared to 5.1% drop in the second-quarter.

The Ministry of Finance said current account surplus in October declined to 833.4 billion from 963.0 billion yen surplus in September.

The trade deficit declined to 766.6 billion yen followed by 714.5 billion yen deficit in the previous month.

Exports climbed 11.2% to 6.57 trillion yen from a year ago month while imports jumped 7.4% to 7.33 trillion yen.

The Bank of Japan said overall total bank lending in November increased 2.7% to 481.70 trillion yen from a year ago followed by 2.3% increase in October.

The Nikkei 225 Stock Average rose 15.19 to 17,935.64 and the broader Topix index edged up 1.91 to 1,447.58.

The yen weakened 0.4% to 121.15 against one dollar.

In Mumbai trading, the Sensex Index declined 338.70 or 1.2% to close at 28,119.40. The CNX Nifty dropped 100.05 or 1.2% to 8,438.25.

Aurobindo Pharma Limited soared 3.5% to Rs 1,162.80 and the natural and ayurvedic medicine maker agreed to acquire the U.S.-based Natrol Inc worth $132.5 million.

Infosys Limited plunged 4.9% to Rs 1,968.60 and second the largest software service provider said N R Narayana Murthy, Nandan Nilekani and their family members sold shares worth Rs 6,484 crore or $1.1 billion.

State Bank of India slipped 1.4% to Rs 313.25 and the financial service provider reported the bank will decide a loan of $1 billion to Adani Group in three-months for its Australian mining project.

The bank also plans to raise $300 million through a bonds issue.