Charting the Markets: Stocks Sliding as Central Banks Decide
Global stocks are falling for a fourth session in a day dominated by central bank decisions. The Reserve Bank of New Zealand cut interest rates while The Bank of Korea and The Swiss National Bank kept rates at a record low. The Bank of England followed suit, holding borrowing costs at a record low 0.5 percent. Emerging-markets equities are sinking for a seventh day, the longest losing stretch since August, as the prospect of a U.S. interest rate hike next week lessens the appeal of riskier assets. European stocks are slipping for the seventh session in eight.
New Zealand's dollar rose against all but one of its major peers after the nation's central bank signaled today's rate cut should be enough to return inflation to target. The RBNZ lowered the official cash rate a quarter percentage point to 2.5 percent, the fourth reduction this year. Any more cuts risk further igniting Auckland's property boom. Economists still aren't convinced the RBNZ is finished. ASB Bank and HSBC are among the banks forecasting further policy loosening in 2016. The New Zealand dollar is the best performing major currency this quarter against the U.S. dollar, rising 5 percent.
Brent crude oil is rising for the first time in five days. Its four-day slump came after OPEC effectively abandoned its output target on Friday. U.S. stockpiles dropped for the first time in 11 weeks, falling the most since December 2012, as refiners drain tanks to cut their tax burden, which is determined by year-end levels. Nationwide supplies remain more than 120 million barrels above the five-year average. Crude oil closed Wednesday at $40.11 in London.
Glencore wants to speed up cutting its $30 billion debt pile. The Swiss commodities trader and miner plans to reduce net debt to between $18 billion and $19 billion by the end of 2016. It had a previous target of the low $20s billion. Capital spending will also be trimmed next year to $3.8 billion from an earlier estimate of $5 billion. The company has already scrapped its dividend, raised $2.5 billion in a share sale, signed a $900 million silver streaming deal and started talks on selling a stake in its agricultural unit. Glencore is the second worst performing stock on the FTSE 100 Index in 2016, plunging 70 percent. Only Anglo American has fared worse.