Oil Falls in Worst Year Since 2008 as Europe Stocks Gain.

http://www.bloomberg.com/news/2014-12-30/yen-holds-rebound-with-gold-after-s-p-500-slips-from-peak.html

Crude oil fell, heading for its worst year since 2008 amid a global supply glut. Stocks rose in Europe, on course for a third annual increase, while yields on Treasuries declined.

West Texas Intermediate crude dropped 2.1 percent to $52.98 a barrel at 7:20 a.m. in New York and the Bloomberg Commodity Index (BCOM), which tracks 22 products from crude to copper, decreased 0.7 percent. Saudi Arabia’s Tadawul All Share Index lost 2.5 percent, after King Abdullah was admitted to hospital for medical checks. The Stoxx Europe 600 Index advanced 0.3 percent and futures on the Standard & Poor’s 500 Index were little changed. Yields on 10-year Treasury notes fell two basis points to 2.17 percent.

Crude’s 45 percent tumble this year, spurred by the largest U.S. output in three decades and OPEC’s refusal to cut production, has roiled global markets and hurt energy-producing nations including Russia, whose ruble had its steepest annual retreat since 1998. Initial jobless claims in the U.S. increased in the week ended Dec. 27 and pending home sales climbed in November, economists forecast before reports today.

“The drop in oil added much more volatility to markets,” said Louis de Fels, a Paris-based fund manager at Raymond James Financial Inc., which oversees about $53 billion. “We’re confident in European equities in 2015. We expect there’ll be fewer geopolitical problems next year. Also, lower oil will help consumption in Europe, the U.S. and China. This is quite good news for 2015 global growth.”

Oil’s Slump

Oil’s slump has squeezed government budgets in producing nations including Venezuela and Ecuador, while boosting China’s emergency crude reserves and helping shrink fuel subsidies in India and Indonesia. OPEC has signaled it won’t cut supply to influence prices, instead preferring to defend market share amid an unprecedented U.S. shale boom.

Commodities headed for the biggest annual loss since the global financial crisis in 2008, retreating for a record fourth year. 

Global Shares

More than $1.8 trillion was added to the value of global shares this year as the S&P 500 (SPX),Dow Jones Industrial Average (INDU) and Russell 2000 Index of smaller companies climbed to records. The Nasdaq Composite Index (CCMP) reached its highest level since March 2000 this week.

The S&P 500 is up 13 percent for the year in its third annual gain. The Stoxx 600 climbed 4.2 percent in 2014 and the MSCI All-Country World Index (SASEIDX) added 2.8 percent.

The volume of Stoxx 600 shares changing hands was 82 percent below the 30-day average today, data compiled by Bloomberg show. The benchmark is down 1.5 percent this month, heading for its first December decline since 2008.

The yen slumped 12 percent against the dollar this year after dropping 18 percent last year and 11 percent in 2012. It was little changed today at 119.35 per dollar. The euro was little changed at $1.2154, set for a 12 percent annual decline.

U.K. government bonds rose, pushing the 10-year yield down four basis points, or 0.04 percentage point, to 1.75 percent.

Bonds returned 7.7 percent in 2014, the most since 2002 when they gained 8.9 percent, according to the Bank of America Merrill Lynch Global Broad Market Index.

Treasury Yields

Yields on 10-year Treasury notes are down from 3.03 percent at the end of 2013.

The MSCI Emerging Markets Index rose 0.3 percent, trimming the first back-to-back annual loss in 12 years. The developing-country gauge fell 4.5 percent in 2014. Global investors pulled the most funds out of emerging markets this month since June 2013, the International Institute of Finance said.