Rout in Oil Spreads to Global Markets

Nichole Harper
11 Dec, 2015
New York City

Stocks on Wall Street extended losses as oil and commodities reach new multi-year lows. Retail sales in November suggested sufficient momentum in the economy. S&P 500 index dropped 1.7% and extended weekly fall to 3.5%. European markets dropped more than 2% and dropped as much as 4.5% for the week.

[R]1:30 PM New York City, New York – Stocks on Wall Street extended losses as oil and commodities reach new multi-year lows. Retail sales in November suggested sufficient momentum in the economy. S&P 500 index dropped 1.7% and extended weekly fall to 3.5%. European markets dropped more than 2% and dropped as much as 4.5% for the week.[/R]

Market indexes on Wall Street extended losses and major indexes declined more than 1.5% after oil deepened losses in the year and yuan in Shanghai dropped to a 4-year low.

Crude oil rout deepened and front month future price declined 2.8% or $1.04 to $35.75 a barrel. The latest price decline was driven by the rising supply worries and oil companies running out of storage space in several key regions of the world.

U.S. retail sales were ahead of expectations after struggling in the previous two months and inventories data were also positive for the GDP calculation.

The seasonally adjusted Producer Price Index in November increased 0.3% after decreasing 0.4% in October and 0.5% in September.

On an unadjusted basis, the index for final demand in November declined 1.1% from a year ago month, the U.S. Department of Labor said.

Retail sales in November adjusted for seasonality and calendar increased 0.2% to $448.1 billion from October and rose 1.4% from a year ago month.

Total retail sales in three months to November increased 1.7% from a year ago period, the Department of Commerce reported.

Separately, the department said inventories at the end of October were unchanged from September to $1,814.5 billion and unchanged from a year ago month.

Sales in October decreased 0.2% to $1,317.7 billion from September and declined 2.7% from a year ago month.

On Wall Street, Tollbooth Strategy Index slumped 143.77 or 1.3% to 10,789.95.

S&P 500 index dropped 36.23 or 1.8% to 2, 015.76 and the Nasdaq Composite Index declined 100 or 2% to 4,945.20.

Crude oil in New York slipped $1.70 to $38.03 a barrel and gold added $3.40 to $1,075.40 an ounce.

U.S. Movers

Adobe Systems Inc ((ADBE)) jumped 3.7% or $3.18 to $92.14 after the application software developer reported revenues in the fourth-quarter ending on November 27 soared 22.4% from a year ago to $1.31 billion.

Net income in the quarter jumped 152.8% to $222.7 million or 44 cents per diluted share compared to $88.1 million or 17 cents per share from the same quarter last year.

European Markets

European markets continued to decline on Friday on concerns about the global economy amid multi-year lows in commodities, 4-year low in Chinese yuan, and deepening gloom in oil.

Investors remained cautious ahead of the highly anticipated meeting on U.S. interest rate policy next week.

In Germany, inflation rose to 0.4% in November from 0.3% in October, according to Destatis. The data indicates the fastest growth in consumer prices since May 2015.

Wholesale prices continued the downward trend, which started more than two years ago, but the decline rate slowed down to 1.1% on an annual basis, compared with 1.6% in October.

In London trading, FTSE 100 index declined 122.98 or 2% to 5,966.86 and in Frankfurt the DAX index plunged 268.25 or 2.5% to 10,330.54.

In Paris, CAC 40 index dropped 81.66 or 1.8% to 4,553.75.

For the week, FTSE 100 index slumped 4.4% and the DAX index plummeted 3.7% and the CAC 40 index slipped 3.4%.

Aurubis AG plunged 17.6% to €47.71 after the Germany-based copper and precious metals producer reported revenues in the fourth-quarter ending in September plunged 13.9% from a year ago to €2.53 billion.

Net in the quarter swung to a loss from a year ago to €48 million compared to profit of €29 million and diluted loss per share swung to a €1.08 form diluted earnings per share of €0.64.

Standard Chartered Plc dropped 2.9% to 494.10 pence after the U.K.-based financial services provider issued new shares of about 705 million, representing approximately 96.79% to qualifying shareholders at 465 pence per share and raise about $5.1 billion.

Asian Markets

The Nikkei average jumped almost 1% after exporters led a rebound. The index finished the week 1.4% lower as the markets were overwhelmed by global concerns about energy and commodity prices during the week.

Prime Minister Shinzo Abe starts his visit to India today after a recent approval of a $14.7 billion Japanese proposal to construct India's first bullet train line.

The Nikkei 225 Stock Average gained 183.93 or 0.9% to 19,230.48 and the broader Topix index rose 9.16 to 1,549.51.

For the week, Nikkei 225 slipped 1.4%.

The yen increased against the dollar to 122.

Showa Denko K.K decreased 1.3% to 149 yen despite a forecast for steady growth.

The petrochemical company expects net sales to jump 3.2% to 810 billion yen in fiscal 2016 and to reach 850 billion yen in fiscal 2017 and 930 billion yen by fiscal 2020.

Market indexes in Mumbai declined for the second week in a row and Nifty index declined to a 13-week low.

Jittery investors stayed on the side lines ahead of Goods and Service Tax bill decision and looks to the U.S. Fed to decide on rate direction at its next policy meeting on Dec 16.

Rupee weakened 16 paisa to 66.87 against one U.S. dollar.

The Sensex Index fell 207.89 or 0.8% to close at 25,044.43. The CNX Nifty decreased 72.85 or 0.9% to 7,610.45.

For the week, Sensex Index dropped 2.3% and CNX Nifty slipped 2.2%.

Sensex has lost 8.9% in the year so far and is likely to register its first annual loss since 2011.

MEP Infrastructure secured toll collection rights in Uttar Pradesh.

Texmaco Rail & Engineering Limited and consortium won a contract worth $180 million or from the Dedicated Freight Corridor Corporation of India.