Oil and gas firms and basic resources companies had the biggest declines among 19... Read More
The Stoxx Europe 600 Index advanced 0.9 percent at 6:31 a.m. in New York, and S&P 500 contracts were 0.6 percent higher. Treasury 10-year note yields increased two basis points to 1.97 percent. The euro dropped 0.3 percent to $1.1807. The krone slid against all of its 16 major counterparts. Oil fell as much as 3.3 percent in London after a seventh weekly drop. Copper traded near the lowest since 2009, approaching $6,000 a ton in London.
Stocks rebounded after posting the worst start to a year since 2008 as sliding oil
prices heighten concern that deflation will curb growth, while Greek elections later this month sparked debate over the fate of the euro. Goldman Sachs Group Inc. cut its oil price forecasts, predicting U.S. crude needs to trade near $40 a barrel to curb shale investments, and Venezuela called on OPEC producers to work together to spur a recovery.
“Concerns about oil and Greece have given us a very volatile start to the year, though this was welcome for us,” said Michael Woischneck, who helps manage about $7.3 billion at Lampe Asset Management in Dusseldorf. “It’s an opportunity to pick up stocks. We increased our equity exposure quite significantly.”
More than three shares advanced for every one that declined in the Stoxx 600, with trading volumes 6 percent below the 30-day average, according to data compiled by Bloomberg. The gauge’s back-to-back weekly decline was the first since October.
Lufthansa Profit
Health-care companies contributed the most to the increase today. Hikma Pharmaceuticals Plc climbed 2.5 percent after saying it will distribute its colchicine drug in the U.S. as a court rejected Takeda Pharmaceutical Co.’s motion to block sales of the gout-flares treatment.Deutsche Lufthansa AG advanced 2.1 percent after Europe’s second-largest airline reiterated profit forecasts for this year, citing a boost from declining jet fuel expenses.
International Consolidated Airlines Group SA rose 1.3 percent, while Aer Lingus Group Plc fell 5 percent. The company known as IAG SA, which owns British Airways, said the Irish carrier rejected a sweetened bid. Energy companies fell for a second day, with Hunting Plc and Seadrill Ltd. down more than 5 percent.
Drug Deals
Foundation Medicine Inc. (FMI) more than doubled in early New York trading after Roche Holding AG said it will pay more than $1 billion for a majority stake in the maker of cancer genomic tests. NPS Pharmaceuticals Inc. jumped 8.8 percent after Shire Plc agreed to buy the maker of medicines used to treat rare diseases for about $5.2 billion.Bristol-Myers Squibb Co. rallied 5.7 percent after saying its Opdivo treatment showed better overall survival rates compared with docetaxel, a form of chemotherapy, in a study of patients with a type of lung cancer.
Developing-nation shares halted a three-day advance, with the MSCI Emerging Markets Index slipping 0.3 percent.
The Shanghai Composite Index retreated for a third day, sliding 1.7 percent before trade data tomorrow. The Hang Seng China Enterprises Index of mainland companies traded in Hong Kong dropped for the first time in four days, slipping 0.5 percent.
China Trade
Chinese exports probably expanded 6 percent last month, up from 4.7 percent in November, and imports dropped 6.2 percent, according to a Bloomberg survey.Russia’s ruble weakened 1.7 percent and the dollar-denominated RTS index of stocks slid 3 percent, while the Micex index slipped 0.4 percent.
Russia is due to publish final inflation figures for December today and Foreign Minister Sergei Lavrov is scheduled to meet Ukrainian, German and French ministers on cease-fire agreement in eastern Ukraine.
The cost of insuring Russian debt rose 6.5 basis points to 584 basis points, approaching the highest level in almost six years, according to data compiled by Bloomberg.
Brent crude dropped 2.9 percent to $48.65 a barrel today, after sinking 11 percent last week. West Texas Intermediate oil fell 2.4 percent to $47.22. Both contracts are heading for their lowest settlement prices since April 2009. Crude has to “stay lower for longer” if investment in shale is to be curtailed to re-balance the global market, according to Goldman analysts.
$100 Oil
Oil prices need to return to $100 a barrel for economic equilibrium, Venezuelan President Nicolas Maduro said in comments broadcast on state television during a tour of OPEC producers in the Middle East. Iraq set a discount for Asian customers that was the second biggest for any month since at least August 2003.Copper for three month delivery on the London Metal Exchange dropped 0.4 percent after closing at $6,090 a ton on Jan. 9, the lowest level since October 2009. The contract hasn’t recorded a daily gain since Dec. 30 on speculation demand may falter amid sputtering economic growth in the U.S., Germany and China, the largest metals consumers.
Norway’s krone weakened 1.1 percent against the dollar to 7.7350 as crude oil declined. The dollar strengthened against all but three of its 16 major counterparts, adding 0.6 percent versus the yen.
Treasury Sales
Treasuries declined after last week’s gains, which had given them their best start to a year since 1998. Thirty-year bond yields climbed one basis point, or 0.01 percentage point, to 2.55 percent before the U.S. auctions $24 billion of three-year notes today, $21 billion of benchmark 10-year securities tomorrow and $13 billion of 30-year bonds the following day.Greece’s bonds rallied amid easing concern that a victory for the anti-austerity Syriza party in this month’s elections would result in the nation leaving the euro region. The 10-year yield fell 70 basis points to 9.44 percent, with two weeks to go until the nation’s Jan. 25 election.
Credit-default swaps insuring $10 million of Greek debt were quoted at $3.9 million upfront and $500,000 annually, signaling a 66 percent probability of default, according to CMA.
The cost of insuring European corporate debt fell, with the Markit iTraxx Europe Index of credit-default swaps on investment-grade companies down 1.5 basis points at 62 basis points, data compiled by Bloomberg show.
Banks including BNP Paribas SA, ING Groep NV and UniCredit SpA are selling bonds today. The average yield on notes issued by financial companies in euros fell to a record 1.08 percent, according to Bank of America Merrill Lynch index data.
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