Oil prices soar, U.S. and euro zone bond yields climb, Italian banks are in focus, and global markets are lower. Here are four things to know in the market on Monday, December 12.
1. Oil Prices Soar
Oil prices soared on Monday to the highest level in over a year after OPEC and non-OPEC producers came to an agreement to reduce output over the weekend.
Non-OPEC members agreed to reduce output by 558,000 barrels per day at the start of the new year. OPEC will reduce output by 1.2 million barrels per day.
Oil prices were also boosted by news that Saudi Arabia is considering a steeper cut than pledged.
Brent futures were up 4.16% to $56.57 per barrel. U.S. crude jumped 4.45% to $53.78 per barrel.
2. U.S. and Euro Zone Bond Yields Climb
Prices of euro zone bonds plunged on Monday, pushing yields higher on expectations that reduced oil output will boost inflation. The U.K.’s 10-year bond reached 1.5%, and Germany’s 10-year hit 0.408%.
The U.S.’s 10-Year Treasury note increased by 2.5% for the first time since October 2014 amid expectations that the Fed will raise rates at its policy meeting this week.
3. Italian Banks are in Focus
Italian bank Monte dei Paschi (MI: BMPS) said on Sunday that it would move forward with its plan to raise five billion euros from private investors. The European Central Bank refused to give the bank more time to raise money to avoid collapse.
The Italian Treasury said it is prepared to bail out the bank if needed.
4. Global Markets are Lower
Global markets are lower on Monday, with the MSCI Pacific Index declining 0.5%. Japan’s Nikkei 225 Stock Average was up by 0.8%, erasing its losses for the year.
The Stoxx 600 Index in Europe was down 0.4%. S&P 500 futures slipped 0.2%.
