Russian Ruble Plunges 9%, European Markets Drop 2%

Nichole Harper
15 Dec, 2014
New York City

Stocks traded lacklustre in New York and Europe after oil price weakness extended to the sixth day in a row. Russian ruble plunged 9% and dropped to a record low of 64 against one dollar sparking capital flight of $125 billion. Market indexes across Europe drop more than 2%.

[R]1:20 PM New York – Stocks traded lacklustre in New York and Europe after oil price weakness extended to the sixth day in a row. Russian ruble plunged 9% and dropped to a record low of 64 against one dollar sparking capital flight of $125 billion.[/R]

Stocks in New York and Europe traded mixed and weaker oil prices hovered trading sentiment.

Energy and resource companies led the decliners after crude oil futures declined for the sixth day in a row and extended yearly loss to 46%.

Crude oil futures in New York and London declined additional 2% and extended year-to-date loss to 46%. Crude oil futures of immediate month delivery declined 15% in the last six-days of trading.

On Friday, IEA lowered its oil demand increase in 2015 by 90,000 barrels a day to average of 93.3 million barrels a day. The oil demand increase was cut largely on the cut in oil consumption in Russia by 195,000 a day to 3.4 million barrels.

Russian ruble tumbled 9.1% to 64.001 against one dollar in international trading and yield of 10-year Russian government bond increased 23 basis points to 13.23%.

Russia ruble is entering a dangerous spiral that can force the central bank and Russian government to cut more imports, restrict travel and stoke higher inflation.

For the year so far, tuble has fallen 48% and central bank has spent so far $80 billion defending the currency dragging down its foreign exchange reserve to a five-year low of $416 billion.

Capital flight from Russia also does not help the central government and Russian businesses and rich families are expected to lead $125 billion transfer.

On Wall Street trading, Tollbooth Index slipped 0.5% or 51.73 to 9,749.50.

S&P 500 index slipped 14.04 or 0.7% to 1,988.50 and the Nasdaq Composite Index dropped 47.19 or 1% to 4,607.90.

Crude oil futures declined 2.5% or $1.48 to $56.33 a barrel and Brent Crude Oil futures fell 1.1% or 69 cents to $61.13 a barrel.

Federal Reserve Bank said November industrial production rose 1.3% after production edged up in October. Manufacturing grew 1.1% and mining production slid 0.1%.

U.S. Movers

Apache Corporation ((APA)) the oil, and gas producer agreed to sell its stake in its two LNG projects, Wheatstone LNG and Kitimat LNG to Australia-based Woodside Petroleum Limited for about $2.75 billion.

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

Emerson Electric Co ((EMR)), the diversified technology company agreed to sell-off its power transmission unit for $1.44 billion to electric motors maker Regal Beloit Corp.

The transaction is expected to close in the first-quarter of next year.

PetSmart, Inc ((PETM)), the pet products retailer entered into a definitive agreement to be acquired by a consortium led by BC Partners, Inc. at a price of $83 per share in cash, represented a premium of 39% or for $8.7 billion.

The transaction is expected to close in the first-half of 2015.

Thoma Bravo LLC, the private equity firm and Canada-based Teachers'''' Pension Plan plans to acquire Riverbed Technology Inc, the network equipment maker in a deal valued at about $3.6 billion.

Under the terms, stockholders of Riverbed will receive $21 per share in cash.

European Markets

In London trading, FTSE 100 index edged down 0.73 to 6,299.90 and in Frankfurt the DAX index rose 0.2% or 23.54 to 9,618.27.

In Paris, CAC 40 index rose 1.19 to 4,110.12.

In European corporate news, Carpetright pre-tax profit surged on 3% increase in revenues. Danske Bank estimated goodwill impairments of about 9 billion kronor.

Johnson Matthey agreed to sell its gold and silver refining business to Japan-based Asahi Holdings for £118 million. Technip abandon plans to acquire rival CGG.

Danske Bank A/S, the Denmark-based bank estimated goodwill impairments of about 9 billion kronor in annual report of 2014 and affirmed its net profit guidance for the year between 11.5 billion kronor and 13.5 billion kronor excluding the of goodwill impairments.

Johnson Matthey Plc, the specialty chemicals maker agreed to sell its gold and silver refining business to Japan-based Asahi Holdings Inc for £118 million or $186 million in cash.

Technip SA, the France-based engineering and construction service provider abandon plans to acquire rival CGG SA, seismic services provider for about €1.46 billion or $1.83 billion in cash.

The offer of €8.30 per share represented a 27% premium over CGG''''s closing price on November 19.

Shares of CGG SA tumbled 30.6% to €4.79.

Separately, today the company signed an agreement with Air Liquide Global E&C Solutions Germany to acquire Zimmer polymer technology business.

Asian Markets

Prime Minister Shinzo Abe’s party led coalition won more than two-thirds majority in the weekend Parliamentary election. The widely anticipated results strengthened the government hand to pass bolder economic reforms. J.Front Retailing and Takashimaya reported weak November sales.[/R]

Stocks in Tokyo closed lower and investors overlooked the expected win in Parliamentary election by the coalition led by Prime Minister Shinzo Abe.

Abe’s ruling coalition won more than two-thirds of 475 seats in the lower house of the Diet, in the lowest voter turnout since World War II. Abe is likely to be the longest serving prime minister in four decades if he completes his term till 2018.

Abe’s Liberal Democratic Party won 291 seats, nearly winning all the sets of 294 it won in landslide win in 2012. The coalition partner, Komeito, won 35 seats, an increase of 4 seats from the previous election two year ago.

The ruling coalition will keep its two-thirds super majority in the 475-seat house, in a low turnout. The super majority will help the ruling coalition to pass laws without the approval of upper house of the Diet.

Democratic Party of Japan made little progress, with only 57 seats compared to 73 in the previous election, despite the falling approval ratings for the government.

The Nikkei 225 Stock Average dropped 272.18 or 1.6% to 17,099.40 and the broader Topix index slumped 20.36 to 1,379.29.

The yen increased 0.4% to 118.58 against one dollar.

In Mumbai trading, Sensex Index fell 31.12 to close at 27,319.56. The CNX Nifty slid 4.50 to 8,219.60.

Bharti Airtel Limited, the largest wireless carrier plans to sell its 1,100 telecom towers in Zambia and Rwanda to IHS Holding.

GMR Infrastructure, Ltd, the infrastructure service provider’s subsidiary acquired 44.61% stake from Malaysia Aerospace Engineering.

Oil India Limited,the oil and gas explorer secured a contract for two offshore oil and gas blocks in Myanmar.