Europe Stocks Fall With Krone, Oil Extends Drop Below $60

Commodity producers led European stocks to their worst week since 2012 as U.S. benchmark oil extended declines below $60 a barrel. Norway’s krone weakened and Russia’s ruble slid to a record, while a surge in government bonds sent yields in Europe to all-time lows.

The Stoxx Europe 600 Index dropped 1.4 percent at 9:56 a.m. in London. Standard & Poor’s 500 Index futures slipped 0.5 percent, with the gauge set to end seven weeks of gains. West Texas Intermediate crude lost 1.7 percent to $58.94 a barrel. The krone weakened 0.7 percent against the dollar after an interest-rate cut. The cost of insuring Russian government debt rose for a 15th day, the longest streak on record. The yield on 30-year German bunds slid as much as six basis points to a record 1.465 percent and France’s reached 1.931 percent.

Oil is headed for the 10th weekly drop since the start of October after OPEC decided against reducing its output, even as the highest U.S. production in more than three decades exacerbates a global glut. Global oil demand next year will be weaker than previously estimated and supply from non-OPEC producers will be bigger, the International Energy Agency said in a report today. While the lower fuel prices hurts producers, that’s boosting demand for bonds as central banks maintain stimulus to thwart deflation.

“Plummeting crude prices will benefit main oil consumers including the U.S., India and Indonesia, while hurting countries like Russia and those in the Middle East,” Hong Sung Ki, a commodities analyst at Samsung Futures (SPX) Inc. In Seoul, said. “For Japan and European nations who are concerned about deflation, decreasing oil prices gives them room to more aggressively ease monetary policy.”

Energy Stocks

The Stoxx 600 has lost 4.7 percent this week, with energy and commodity producers leading the declines. Royal Dutch Shell Plc slid 2 percent today and BP Plc fell 1.9 percent. Rio Tinto Group dropped 1.5 percent.

BASF SE declined 3 percent after Morgan Stanley lowered its rating on the German chemical maker. Kering SA fell 1.1 percent after saying two top executives at Gucci will step down from the luxury label.

Greece’s ASE Index rose 0.2 percent after a 20 percent plunge in the previous three days took the gauge to its lowest close since July 2013. The gauge is heading for its worst week since 1987 and has become the world’s worst-performing measure after Russia’s RTS Index.

Futures on the S&P 500 expiring in March fell, indicating the index will drop after yesterday’s rebound. It’s lost 1.9 percent this week, the biggest decline in two months.

Adobe Jumps

Adobe Systems Inc. (ADBE) jumped 8 percent in German trading after the software maker reported fiscal fourth-quarter revenue that topped estimates.

The MSCI Emerging Markets Index fell 0.2 percent, extending the slide in the past week to 4.2 percent, the worst week since June 2013.

Russia’s ruble weakened as much as 2.7 percent to a record 57.9860 per dollar before trading 1.8 percent lower at 57.4745. The currency is the worst performer this year after Ukraine’s hryvnia among more than 160 currencies tracked by Bloomberg worldwide.

Central bank Governor Elvira Nabiullina increased rates yesterday by 1 percentage point to 10.5 percent, only to see the ruble sink to an all-time low less than a minute later. A more drastic move would accelerate the economy’s downturn, with no guarantee of halting the currency’s slide if oil prices extend their slump this year, according to Lars Christensen from Danske Bank A/S.

Russia Risk

Credit-default swaps on Russia rose 11 basis points to 438 basis points, according to data compiled by Bloomberg. The contracts were the most actively traded in the world last week, according to the Depository Trust & Clearing Corp.

Indonesia’s rupiah fell as much as 0.9 percent to a six-year low of 12,453 per dollar. Global funds sold $114 million more local stocks than they bought this week through yesterday, set for the biggest net outflows since October.

The Hang Seng China Enterprises Index rose 0.1 percent, leaving it 2.9 percent lower since Dec. 5. The Shanghai Composite Index finished 0.4 percent higher and was little changed over five days after a week that saw the biggest daily price swings in four years.

Factory production rose 7.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing, down from 7.7 percent in October and less than the 7.5 percent median estimate in a Bloomberg News survey. Investment in fixed assets such as machinery expanded 15.8 percent in January through November from a year earlier, and retail sales gained 11.7 percent last month.

WTI for January delivery dropped as much as $1.15 to $58.80 a barrel after losing 99 cents to $59.95 yesterday, the lowest close since July 2009. Brent crude slid 1.4 percent to $62.78 today.

Gold fell 0.4 percent to $1,222.36 an ounce, trimming a second weekly advance amid declining oil prices and prospects for higher U.S. interest rates.

To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Heesu Lee in Seoul at hlee425@bloomberg.net

To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net Stuart Wallace

Leave a Reply