Wednesday December 30th

30-12-2015

Wall Street eyes crude ahead of inventories data

U.S. stock index futures declined on Wednesday, tracking European shares lower as oil prices continued to slide. Trade volumes in the market will likely be thin given the holiday season, with commodities in focus. A Citigroup analyst warned that any upcoming oil price boost would be short-lived. "We do have a current physical supply-demand surplus. That fits with the price theme…that prices will be lower for longer," Tim Evans, an energy analyst at the bank, told CNBC on Wednesday. Some major European energy stocks underperformed on Wednesday, including BP, which traded down around 1.5 percent on the London Stock Exchange. Few economic data or earnings of note are due from the U.S. There will be November pending home sales at 10 a.m. and weekly crude oil inventories at 10:30 a.m. In stock news, the Italian tax office reported on Wednesday that it had reached a deal with Apple over corporate tax payments. La Repubblica newspaper reported that the tech giant has agreed to pay 318 million euros ($348 million) to settle the office's investigation. Global economic growth will be "disappointing" in 2016, the head of the International Monetary Fund (IMF) said in a guest article for German newspaper, Handelsblatt, published on Wednesday. IMF Managing Director Christine Lagarde said that the prospect of rising interest rates in the U.S. and an economic slowdown in China were increasing economic uncertainty worldwide. Saudi Arabia reported a record deficit and announced plans to cut public spending and increase revenues from non-oil sources this week, casting light on the impact from low prices on the world's top oil exporter. "If my inbox is anything to judge by, it's Saudi Arabia's austerity program which is driving most interest this week. That's a reminder that even the world's lowest-cost oil producer relies on high(er) prices to balance its budget and current prices don't come anywhere close," Kit Juckes, a strategist at Societe Generale, said in a research note on Wednesday. Asian shares retraced some early gains Wednesday to close mixed, with South Korea and Hong Kong falling into the red, while the Australia and Shanghai markets ended on a positive note. The Japan market finished its final trading day of the year in positive territory as the Nikkei registered a yearly gain of 9.27 percent. The Japanese market maintained its momentum, as the benchmark Nikkei 225 index registered its fourth consecutive year of gains on its final trading day of 2015. The index closed up 51 points, or 0.27 percent, at 19,033 Wednesday. Brent crude oil retreated toward 11-year lows on Wednesday as indications of slowing global energy demand bumped up against record-high inventories. Benchmark Brent, near $37 per barrel, traded just $1 away from those lows reached last week as the primary supportive factor — an expected cold snap in Europe and the United States — was forecast to be short-lived. Front-month U.S. West Texas Intermediate crude futures were trading at $36.84 per barrel at 7:38 a.m. EDT (1238 GMT), down $1.03, or 2.7 percent, from their settlement in the previous session. Brent was down 84 cents, or 2.2 percent, at $36.95 a barrel. Gold inched lower on Wednesday, as the combination of a firm dollar and weak oil prices left the metal on track for its third consecutive annual loss. Bullion has lost almost 10 percent of its value this year, largely on concerns that higher U.S. interest rates would hurt demand for the non-yielding asset. Spot gold was down 0.1 percent at $1,067.56 an ounce. Trading volumes were muted in the holiday-shortened week.