Wall Street and London Struggle After Oil Drops to 7-Year Low

Nichole Harper
07 Dec, 2015
New York City

Market indexes on Wall Street struggled after oil took another dive and dropped to a low not seen in seven years. Oil prices have dropped nearly 60% in the last eighteen months and the bearish sentiment is rising. Keurig Green Mountain agreed to go private.

[R]10:50 AM New York City, New York – Market indexes on Wall Street struggled after oil took another dive and dropped to a low not seen in seven years. Oil prices have dropped nearly 60% in the last eighteen months and the bearish sentiment is rising. Keurig Green Mountain agreed to go private.[/R]

Stocks on Wall Street traded lower after weak oil prices hovered the Monday merger news.

Crude oil prices declined to the lowest in the year and extended the yearly loss to 60% after OPEC member nations failed to limit production quota at a meeting held on Friday.

Investor’s bearishness was most visible in the options market and interest in put options at prices $25 to $35 a barrel increased more than 40% in the last two months.

On Wall Street, Tollbooth Strategy Index slid 4.11 to 10,058.64.

S&P 500 index slipped 11.14 or 0.5% to 2,080.62 and the Nasdaq Composite Index dropped 27.38 or 0.5% to 5,115.37.

Crude oil in New York declined $1.29 to $38.68 a barrel and gold declined $8.60 to $1,077.84 an ounce.

U.S. Movers

Devon Energy Corporation ((DVN)) declined 4.7% or $1.92 to $38.60 after the oil producer said it plans to acquire assets from Felix Energy in the Anadarko Basin for about $1.9 billion.

The company plans to acquire 80,000 net surface acres in the Anadarko Basin in Oklahoma and Texas.

Separately, Devon agreed to acquire 253,000 net acres in the Powder River Basin in Wyoming for about $600 million.

Keurig Green Mountain Inc ((GMCR)) surged 74.4% or $38.50 to $90.21 after the coffee, coffeemakers, teas and beverages maker agreed to be taken private by an investor group led by JAB Holding Co for $92 per share or $13.9 billion in cash, represents 78% premium to closing price of Friday.

The transaction is expected to close during the first-quarter of 2016.

European Markets

In London trading, FTSE 100 index gained 22.22 or 0.4% to 6,260.46 and in Frankfurt the DAX index increased 207.06 or 1.9% to 10,960.46.

In Paris, CAC 40 index jumped 75.80 or 1.7% to 4,790.59.

CMA CGM, the France-based privately held shipping company agreed to acquire Singapore-based rival Neptune Orient Lines Ltd for about $2.4 billion in cash, excluding debt.

Revenues of the combined companies are estimated of about $22 billion and vessels strength to operate 563.

The deal is subject to the approval of antitrust authorities and expected to receive by mid of fiscal 2016.

Electrolux AB plunged 11.7% to 211.10 Swedish Kronor after the General Electric terminated to sale of its appliance business to Electrolux after the U.S. Department of Justice sued to stop the proposed acquisition.

Electrolux said under the transaction agreement, it has to pay the termination fee of $175m to GE under certain circumstances.

Stork B.V, the Netherlands-based privately held technical services provider agreed to be acquired by the U.S.-based engineering and construction company Fluor Corporation for about $755 million.

Asian Markets

Nikkei rebounded 1% following the stronger-than-expected U.S. payrolls increase in November. Markets across Asia gained and the yen weakened to 123 mark against the U.S. dollar.

Energy complex stocks declined after OPEC decided to hold its production quota despite the rising glut in the market.

The Nikkei 225 average recovered from the Friday decline and jumped 1% on stronger than expected U.S. job data.

U.S. private and public sector added net 211,000 jobs in November and unemployment rate held at 5% in the month.

The larger than expected payrolls gains also supported the case the Federal Reserve may increase interest rates for the first time in a decade at the next two-day policy meeting ending on Dec 16.

Energy complex stocks declined after the OPEC member nations decided to hold daily production quota despite the price of a barrel dipping below $40 in New York.

Rising supply in the U.S. and sustained elevated production in Russia and the falling demand in China are contributing the latest price decline in the world’s most heavily traded commodity.

The Nikkei 225 Stock Average gained 193.67 or 1% to 19,698.15 and the broader Topix index increased 11.19 to 1,585.21.

The yen weakened to 123.27 against a dollar.

Stocks in Mumbai traded lower in choppy trading and the Sensex index edged down 0.4%.

Sensex declined for the fourth day in a row and extended losses to nearly 2.5% on sustained outflow of funds from foreign investors.

Rupee edged up 1 paisa to 66.68 against one U.S. dollar.

The Sensex Index edged down 108 or 0.4% to close at 25,530.11. The CNX Nifty slid 16.50 or 0.2% to 7,765.40.

GMR Airports is in talks to sell 30% stake airport business to Canada-based Fairfax Financial and the U.S. based private equity firm.

Tata Steel is close to divesting its U.K.-based steel plant.