Kuwaiti Oil Minister Ali Al-Omair said OPEC won’t cut production at its Nov. 27... Read More
Brent oil slid 1.9 percent to $78.86 a barrel at 8:15 a.m. in New York. The Stoxx Europe 600 Index fell 0.2 percent and Standard & Poor’s 500 Index futures advanced less than 0.1 percent. Average yields on investment-grade bonds in euros fell to a record 1.16 percent and now yield the least relative to notes in dollars since December 2005, according to Bank of America Merrill Lynch data. The pound retreated to a 14-month low against the dollar. Russia’s ruble declined against all of its 31 major peers.
Saudi Arabia’s Oil Minister Ali Al-Naimi dismissed talk of an OPEC price war. About $3.4 trillion has been added to the value of global stocks in the past four weeks as
U.S. corporate earnings beat estimates and the Bank of Japan boosted stimulus measures. Ericsson AB, the world’s biggest maker of wireless networks, led technology stocks higher in Europe on plans to cut costs by $1.2 billion.
Among mergers and acquisitions, Warren Buffett’s Berkshire Hathaway Inc. agreed to buy the Duracell battery business from Procter & Gamble Co. for $4.7 billion in stock. DreamWorks Animation SKG Inc. jumped 24 percent in early New York trading after people briefed on the matter said Hasbro Inc. is in talks to acquire the film studio.
Brent for December settlement fell to as little as $78.71 a barrel, the lowest since September 2010. West Texas Intermediate was down 1.2 percent at $76.26 a barrel, set for its lowest settlement price since 2011.
Price War
Oil has collapsed into a bear market as leading OPEC members resisted calls to cut production and instead reduced export prices to the U.S., where output has climbed to the highest level in more than three decades.Saudi Arabia is committed to a stable market and concern of a price war within the Organization of Petroleum Exporting Countries “has no basis in reality,” Al-Naimi said yesterday in Acapulco, Mexico. Saudi discounts offered to Asian customers in October triggered speculation that OPEC’s largest member was seeking to preserve market share. The group is scheduled to meet Nov. 27 in Vienna.
U.S. crude inventories probably rose for a sixth week, expanding by 1.1 million barrels through Nov. 7, according to the median estimate in a Bloomberg survey of nine analysts before data from the Energy Information Administration today.
Ericsson Rallies
Ericsson gained 3.1 percent. Iliad SA (ILD) advanced 4.8 percent as mobile-subscriber additions helped the French carrier post third-quarter revenue above analysts’ estimates.Bayer AG rose 1.4 percent after Kepler Cheuvreux SA raised its recommendation on the stock to buy from hold. KBC Groep NV rallied 6.7 percent after posting third-quarter profit that beat projections. Finnish papermaker UPM-Kymmene Oyj climbed 4.2 percent after announcing a new profit-improvement goal.
Wal-Mart Stores Inc. gained 1.9 percent in early New York trading after third-quarter earnings per share exceeded analyst forecasts. Of the companies in the S&P 500 that have reported so far, 80 percent have beaten estimates for profit and 60 percent have topped sales projections, data compiled by Bloomberg show.
The ruble weakened 1.1 percent to 46.47 per dollar, erasing yesterday’s gain and leaving the currency 0.4 percent stronger this week. Russia’s Micex Index slipped 0.5 percent.
Brussels Meeting
Representatives of the EU’s 28 member states and the U.S. are meeting today in Brussels to discuss imposing new penalties on individuals or on the Russian economy for the country’s interference in Ukraine, according to diplomats close to the talks.While no consensus has been reached yet, officials will prepare options for an EU foreign ministers meeting in Brussels on Nov. 17, when the group could move to expand penalties, said the diplomats, who spoke on condition of anonymity because they weren’t authorized to be quoted.
The yield on Ukraine’s dollar-denominated note due in July 2017 added five basis points to a record 17.69 percent, after jumping 1.50 percentage points yesterday. It costs $3.1 million upfront and $500,000 annually to insure $10 million of Ukraine’s debt for five years, signaling a 62 percent probability of default within that time, according to CMA.
The hryvnia gained 2.1 percent, trimming this year’s slide to 49 percent, the biggest depreciation worldwide.
China Stimulus
The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong added 0.7 percent after a report the central bank will inject cash into smaller banks. The Shanghai Composite Index slid 0.4 percent, falling from a three-year high.The People’s Bank of China is gauging city commercial banks’ demand for funds to support lending to small enterprises, according to an official with knowledge of the matter. The PBOC’s move comes as data today showed China’s industrial output growth slowed in October and fixed-asset investment trailed estimates.
Sterling weakened after Bank of England Deputy Governor for Monetary Policy Ben Broadbent said on BBC Radio 5 Live that disinflationary trends in the U.K. economy “will remain in place for a while” and a report showed evidence of a property-market slowdown. It extended a slump from yesterday, when the Bank of England cut its growth forecasts for the U.K.
The U.K. currency fell against all of its 16 major counterparts, declining as low as $1.5753, the weakest level since September 2013.
Rate Outlook
The dollar slipped versus the euro after New York Federal Reserve President William C. Dudley urged investors to be patient on the timing of a U.S. interest-rate increase.The dollar depreciated 0.2 percent to $1.2464 per euro and was little changed at 115.52 yen after advancing as much as 0.3 percent.
The yen weakened earlier today after a report that Prime Minister Shinzo Abe has decided to call an election.
“Several of the various ‘headwinds’ that have impeded U.S. economic activity in recent years have subsided,” Dudley said today in a speech at the Central Bank of the United Arab Emirates in Abu Dhabi. “Although patience is appropriate, if all goes well, I anticipate that we will begin to raise short-term rates sometime next year.”
Government bonds were little changed. Yields on Treasury 30-year bonds were at 3.09 percent. The gap between U.S. three-and 30-year yields approached the narrowest level since 2009, reflecting demand for longer debt as inflation holds in check even as the economy expands.
The 30-year securities have returned 21 percent in 2014, according to Bank of America Merrill Lynch indexes.
The cost of insuring corporate debt fell, with the Markit iTraxx Crossover Index of credit-default swaps on high-yield companies declining two basis points to 346 basis points. Average yields on junk borrowers declined to 3.99 percent, the lowest since Sept. 25, Bank of America Merrill Lynch data show.
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