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Market Update

Deepening Oil Plunge Drives Global Financial Markets Selloff

Author: Nichole Harper
Last Update: 1:50 PM ET December 12 2014

1:30 PM New York – Global markets accelerated decline after oil price loss in the year extended to 44%. The latest decline in oil price was driven by the lowered global oil demand growth in 2015. Currencies of oil producing nation including Russia, Norway, Venezuela and Middle Eastern stock markets took another hit.

Stocks in New York traded lower and the International Energy Agency, formed by advanced Western nations, lowered its 2015 demand outlook for oil.

Crude oil futures in New York and London declined additional 4% and extended year-to-date loss to 44%. Crude oil futures of immediate month delivery declined 12% in five-day trading this week.

IEA lowered its oil demand increase in 2015 by 90,000 barrels a day to average of 93.3 million barrels a day. The oil demand increase was cut largely on the cut in oil consumption in Russia by 195,000 a day to 3.4 million barrels.

Department of Labor reported producer price index dropped 0.2% in November on a seasonally adjusted basis followed by 0.2% increase in October and 0.1% slide in September.

On Wall Street trading, Tollbooth Index fell 0.6% or 56.77 to 9,865.91.

S&P 500 index slipped 19.25 or 0.9% to 2,016.53 and the Nasdaq Composite Index fell 24.77 or 0.5% to 4,683.99.

Crude oil futures declined 4% or $2.43 to $57.52 a barrel and Brent Crude Oil futures fell 3.05% or $1.95 to $61.73 a barrel.

Russia Hikes Interest Rates, Oil Linked Currencies Extend Losses

Russia hiked its benchmark interest rate by 1% to 10.5% from 9.5%. The central bank also defended ruble by spending $1 billion in currency market in the last three days and may have spent more than $5 billion in the last two weeks.

The ruble dropped to record low at 58.76 against one dollar as the oil price futures deepened losses in the year close to 45%.

Russian Trading System Cash Index plunged additional 2.9% and extended year-to-date loss to 42.4%. The benchmark index in Brazil, iBovespa, has plunged more than 20% from its peak in September and for the year declined 6%.

The Venezuela’s benchmark index has surged 41% as investors bid up asset prices to match rising inflation but currencies of Brazil and Mexico have lost 12% value in 2014.

Argentine Peso has plunged 22% in parallel market, Chilean peso has dropped 15% and Colombian peso has plunged 19% in 2014. Venezuelan currency in parallel market has plunged more than 70% in the year so far.

Dubai DFM General Index dropped 7.4% on Thursday followed by 8.7% plunge on Wednesday and the index is now up 4% in the year so far.

Emmar Properties, plunged 9.1% on Thursday as investors worried that the decline in stock market and the recent plunge in ruble will affect the property market.

U.S. Movers

Adobe Systems Inc (ADBE), the diversified software company reported revenues in the fourth-quarter ending on November 28 increased 2.9% to $1.07 billion from a year ago period.

Net income in the quarter jumped 12.2% to $73.3 million or 14 cents a diluted share compared to $65.3 million or 13 cents from a same quarter last year.

Separately, yesterday the company agreed to acquire privately-held Fotolia, a leading marketplace for royalty-free photos, images, graphics and HD video for about $800 million in cash.

Nordson Corporation (NDSN), the testing and inspection equipment maker reported sales in the fourth-quarter ending in October climbed 14% to $468.6 million from a year ago period.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc