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Spanish prime minister Mariano Rajoy lost his majority. Prime Minister Mariano Rajoy’s People’s Party won 123 out of 350 seats, losing its majority. Although still a victory, the results were a disappointment from the 186 seats the party claimed in the previous election. Rajoy must now form a coalition government. The anti-austerity Podemos party (We Can) made big gains, winning 69 seats. Spain’s 10-year yield is up 7 basis points basis points at 1.77%.
Brent crude oil hit its lowest level in more than a decade. Early selling dropped the energy component to its lowest level in 11 years. Brent crude fell 1.4% to $35.16 per barrel in early trade before recovering to its current $36.42. Similarly, West Texas Intermediate crude oil sank to a low of $34.31 per barrel, just missing its own 7-year low. The weakness in energy prices comes as the world has been flooded with supply as OPEC looks to put pressure on US shale producers.
Gas fell below $2 per gallon. Bloomberg cites data from GasBuddy Organisation, which said the average price of gasoline in the US hit $1.999 per gallon on Saturday. This marked the first time in six years that prices at the pump fell below the $2 per gallon level. According to GasBuddy, a gallon of gas cost $2.11 a week ago, and $2.44 a year ago.
Azerbaijan’s currency is in free fall. The former Soviet republic’s currency, the manat rate, is down 48.2% at 1.5500 per dollar after the central bank announced it has decide to free-float its currency. As of December 21, the manat rate “will be determined by demand and offer on the Forex market,” the country’s central bank said. Azerbaijan has become the second former Soviet republic to free-float its currency in recent months. Khazakstan’s tenge had its peg removed in August.
A Bank of England member says rates in the UK won’t rise anytime soon. Bank of England Monetary Policy Committee member Martin Weale told the Telegraph, rates in the UK won’t be going up anytime soon. Weale suggested weak wage growth is likely to keep the Bank of England’s key rate at a record low 0.50% for the foreseeable future. “I initially thought that the weak wage growth was a wobble that represented stray numbers that you get once or twice from time to time,” Weale said. “There has plainly been something more to it than that.” The British pound is little changed near 1.4900.
Russia and Ukraine might be headed to court. Last week, Ukraine defaulted on its $3 billion debt payment to Russia after Russia failed to accept a restructuring. Now, Russian Prime Minister Dmitry Medvedev has ordered the government to ready legal action against Ukraine. Bloomberg reports Russian Deputy Finance Minister Sergey Storchak said Ukraine has “no chance of winning this case.”
Toshiba is cutting a bunch of jobs. According to Reuters, the electronics maker will eliminate 7,000 jobs as it narrows its focus on chips and nuclear energy. Toshiba announced it expects a loss of ¥550 billion ($4.53 billion) as a result of its restructuring, which comes as the company looks to repair the damage of its $1.3 billion accounting scandal. “By implementing this plan, we would like to regain the trust of all stakeholders including shareholders and transform ourselves into a robust business,” Toshiba said in a statement.
Panasonic is entering the food distribution industry. Reuters reports, electronics marker Panasonic is buying fridge maker Hussmann from private equity firm Clayton, Dubilier & Rice for $1.5 billion. Minority owner Ingersoll Rand will retain its 36.7% stake in the company. The deal helps Panasonic diversify away from its smartphone and television business.
Stock markets around the world are mostly higher. China’s Shanghai Composite (+1.8%) led the gains in Asia and Germany’s DAX (+0.9%) paces the advance in Europe. Spain’s IBEX (-2.6%) lags after the election. S&P 500 futures are up 17.50 points at 2009.50.
The economic calendar is empty. Data picks up on Tuesday and is extremely heavy on Wednesday before slowing on Thursday, ahead of the holiday. US markets will close early on Thursday for Christmas Eve. The US 10-year yield is unchanged at 2.20%.
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