Market commentary: Investors focused on Greek parliamentary vote

Markets are trading higher as we move closer towards the close of 2014. The positivity this morning is coming from both a rebound in the price of oil and a new regulation in China that will lead to savings held by lenders for non-deposit-taking financial institutions being counted as bank deposits without being subject to reserve requirements.

Oil advanced for the first time in three days amid speculation that an escalating conflict in Libya will help ease a global supply surplus that’s driven crude into a bear market. Oil has fallen 46% this year, set for the biggest annual drop since 2008, as OPEC resisted supply cuts to defend market share even as production in the US climbed to the highest level in three decades amid a shale boom. Libya pumped 580,000 barrels a day in November, down from about 1.59 million at the end of 2010.

Greece will dominate the headlines in stock markets today. Prime Minister Antonis Samaras faces a vote in parliament today that will decide whether the country goes to snap elections that could bring the leftwing Syriza party to power and derail an international bailout. In the most hotly contested vote for president since Greece joined the euro more than a decade ago, the result in the final round of voting is likely to be decided by a small handful of deputies. 

If lawmakers fail to elect a successor to 85-year-old Karolos Papoulias, a snap election will be held within weeks. Syriza, leading in the opinion polls, vowed again to renegotiate the joint European Union-IMF bailout bailout Greece needs to pay its bills and roll over its debt.

In Ukraine, lawmakers approved the 2015 state budget as the country seeks to unlock the next tranche of a $17 billion bailout loan from the International Monetary Fund. The budget was backed today by 233 lawmakers in the 450-seat Kiev-based legislature0 after debating tax-code changes and other issues.

In Russia, some traders are already betting on a reduction in the biggest interest-rate increase in 16 years. While there are plenty of obstacles to lowering rates with inflation at a 3.5-year high and the ruble set for the biggest drop since 1998, derivatives used to predict future borrowing costs signal cuts are in store in the first quarter. Central bank Governor Elvira Nabiullina unexpectedly raised the benchmark to 17% from 10.5% two weeks ago, putting the economy at risk of a deeper recession to prop up the ruble.

In corporate news, Visa and MasterCard, the world’s biggest payments networks, halted services to Crimea after the US escalated sanctions in response to Russia’s annexation of the peninsula and its activities in Ukraine. The card firms are responding to an executive order from the Obama administration last week, according to e-mails today from the companies’ Russian press offices.

“Visa is now prohibited from offering Visa-branded products and services to Crimea,” the company said. “This means that we can no longer support card-issuing and merchant/ATM acquiring services in Crimea.”

Allianz Global Corporate & Specialty UK is lead reinsurer for aviation hull, liability insurance, spokeswoman says by e-mail. AirAsia passenger jet vanished off the coast of Borneo more than a day ago with 162 people on board.

Audi will spend 24 billion euros to develop technology and expand production, boosting its five-year investment plan by 2 billion euros as it chases BMW for the top spot in luxury-car sales. About 16.8 billion euros, or 70% of the total, is earmarked for new models like the Q1 subcompact sport-utility vehicle, the Ingolstadt, Germany-based unit of Volkswagen AG said today in a statement. Audi expects to sell a record of more than 1.7 million autos this year.

This article was issued by Mr. Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. 

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