U.S. and European Markets Rebound as Oil Jumps 4%

Nichole Harper
16 Jan, 2015
New York City

Market indexes on Wall Street rebounded after five days of decline on the back of crude oil price gain. The consumer price index declined the most in six years in December and factory production slowed in the month and consumer confidence rose to the level not seen since January 2004.

[R]1:40 PM New York – Market indexes on Wall Street rebounded after five days of decline on the back of crude oil price gain. The consumer price index declined the most in six years in December and factory production slowed in the month and consumer confidence rose to the level not seen since January 2004.[/R]

Stocks on Wall Street halted a five-day decline after crude oil prices rebounded and market indexes in Europe advanced.

Swiss National Bank abruptly abandoned its commitment to support the stronger franc after its euro assets surged 95% in three-year period.

The mounting cost of defending the peg and coming decline of euro forced the central bank to stop supporting the euro as the currency had taken 45% of all assets held by the SNB as of the data available at the end of September.

On Wall Street trading, Tollbooth Strategy Index rose 0.3% or 26.62 to 9,737.34.

S&P 500 index gained 9.86 or 0.5% to 2,002.45 and the Nasdaq Composite Index increased 22.74 or 0.5% to 4,593.74.

The Department of Labor reported consumer prices index in December dropped 0.4% from November. For the year, all item index before seasonal adjustment, increased 0.8%.

The price index fell the most since December 2008 after price of apparel, fuel and cost of new and used vehicles declined.

The Federal Reserve Bank said industrial production in December fell 0.1% after rising 1.3% in November.

Crude oil rebounded and futures price of West Texas crude surged 3.9% or $1.81 to $48.08 and gold rose $11.20 to $1,276.01 an ounce.

Swiss Index Extend Losses by 5%

The global fallout from the Swiss National Bank policy reversal continued for the second day in a row.

Several small and large currency brokers from as far as New Zealand, Hong Kong, UK and U.S. reported financial distress and account closures.

FXCM Inc, one of the largest online currency traders for retailers in New York, plunged nearly 90% in pre-market trading and stock was still halted on New York Stock Exchange after one hour of trading.

FXCM said in a statement on Thursday after the market close that its clients had suffered losses of $225 million and the company may have breached capital regulatory requirements.

Alpari UK, a separate company in the Alpari group of companies, confirmed on Friday that the company has sought insolvency after a large majority of its clients suffered losses that exceeded account capital.

Swiss Stock Market Index declined 5% after plunging 10% in the previous session and the Swiss franc traded with less volatility and decreased 4% to 1.01 francs per euro.

U.S. Movers

Goldman Sachs Group Inc ((GS)) slipped $1.72 to $176.77 after the diversified financial service provider reported net revenues in the fourth-quarter ending in December declined 12% to $7.69 billion from a year ago period.

Net income in the quarter plunged 10% to $2.03 billion or $4.38 a diluted share compared to $2.25 billion or $4.60 from the same quarter last year.

The investment company said equity underwriting in the period tumbled 45% to $342 million and debt underwriting plummeted 21% to $406 million from a year ago period.

Intel Corporation ((INTC)) slid 10 cents to $36.10 after the microprocessor and chipset maker reported revenues in the fourth-quarter ending in December dropped 6% to $14.7 billion from a year ago period.

Net income in the quarter soared 39% to $3.7 billion or 74 cents a diluted share compared to $2.6 billion or 51 cents from the same quarter last year.

European Markets

In London trading, FTSE 100 index slid 0.06% or 3.63 to 6,495.15 and in Frankfurt the DAX index fell 0.3% or 32.56 to 10,000.05.

In Paris, CAC 40 index closed nearly unchanged at 4,323.05 and in Zurich SMI index plunged 5.2% to 7,964.32.

European markets opened higher but struggled to hold on gains and market indexes in Zurich extended losses for the second day in a row.

The National Exhibition Centre, the Birmingham, U.K.-based exhibition venue manager announced a binding agreement to sell the company to a private equity firm LDC, a subsidiary of Lloyds Banking Group for £307 million.

The deal includes 125-year lease of the NEC site and 25-year leases on the ICC and Barclaycard Arena.

The transaction is expected to close in April.

RWE AG climbed 5.7% to €23.78 after the Germany-based electricity and gas utility agreed to complete the sale of its gas and oil unit RWE Dea in its entirety by early March for about €5 billion or $5.8 billion to Russian tycoon Mikhail Fridman.

Investors were worried that the deal may collapse after the recent plunge in ruble and rising tensions between Russia and Germany. Several deals between the two countries have been canceled in the last five months including a deal to exchange natural gas assets between BASF and Gazprom.

Asian Markets

Market indexes in Japan extended losses and for the week the Nikkei index plunged 3.4% and the yen eased 0.3% to 116.55 against one dollar. Market indexes in Japan declined for the third week in a row.

Market indexes in Tokyo dropped on growing worries of the rising pressure on the euro after Switzerland abandoned its three-year old pledge to peg Swiss franc to the euro.

Investors were unnerved by a sharp policy reversal at the Swiss National Bank after the central bank abandoned its central tenet of its monetary policy, anchoring the currency to the euro.

The surprise move stunned currency traders and the Swiss franc soared as much as 41% against the euro before subsiding to an increase of 14%.

The Swiss franc appreciated as much as 85.56 centimes to a euro before stabilizing at 1.02 franc.

The Nikkei 225 Stock Average dropped 244.54 or 1.4% to 16,864.16 and the broader Topix index slumped 12.87 or 0.9% to 1,363.73.

For the week, Nikkei 225 plunged 3.4% and the yen strengthened to 116.51 against one dollar.

Chugai Pharmaceuticals and Sosei Group fell after Swiss franc strengthened.

In Mumbai trading, Sensex Index gained 46.34 or 0.2% to close at 28,121.89. The CNX Nifty added 19.65 or 0.2% to 8,513.80.

For the week, Sensex jumped 2.4% and CNX Nifty climbed 2.8%.

Stocks in Mumbai extended rally for the second day after the first rate cut announcement in nine months.

Indian rupee strengthened to 61.87 after Reserve Bank of India lowered rate for the first time since April 2014 in a surprise move and said inflationary forces are waning on sharply lower oil price.

Axis Bank Limited rose 0.2% to Rs 514.90 after the financial service provider said net in the third-quarter surged 18.43% to Rs 1,899.76 crore.

Total Revenues soared 15.85% to Rs 10,928.81 crore.

Dewan Housing Finance Corporation Limited advanced 2.4% to Rs 487.45 after the lender said net in the third-quarter climbed15.36% to Rs 159.65 crore.

Net Revenues jumped 17.30% to Rs 1,526.53 crore.