Investing.com - Here are the top five things you need to know in financial markets on Monday December 12.
1. Production cut deal sends oil price soaring
Oil prices surged to the highest levels since July 2015 after major producers reached a deal to cut output over the weekend.
Producers from outside OPEC agreed to cut output by 558,000 barrels per day from January 1 after OPEC announced plans last month to cut output by 1.2 million bpd.
Oil prices received an additional boost after Saudi Arabia indicated that it may be prepared to make deeper cuts than it initially pledged.
U.S. crude was trading at $53.78 a barrel at 10:50 GMT, up $2.29 or 4.45% from its last close, while global benchmark Brent futures were at $56.57 a barrel, up $2.23 or 4.16%.
2. Italian bank rescue efforts to continue
Attempts to rescue Italy’s banks looked set to continue after foreign minister Paolo Gentiloni was chosen to replace Matteo Renzi as prime minister.
Italy's third biggest lender Monte dei Paschi (MI:BMPS) said on Sunday it would continue with a plan to raise €5 billion from private investors after the European Central Bank refused to give it more time to raise the money it needs to avoid collapse.
Italy’s Treasury said Monday it is ready to bail out the bank if necessary.
3. Euro zone, U.S. yields climb
Prices of euro zone bonds fell on Monday, sending yields higher amid expectations that the deal to cut oil output will drive up inflation. Yields rise when bond prices fall.
The yield on UK 10-year bonds hit 1.5% for the first time since May, up from 1.43% late Friday.
The yield on Germany’s 10-year Bund hit 0.408%, up from 0.347% on Friday, while France’s 10-year yield touched an 11-month high of 0.919%.
Meanwhile, the yield on the U.S. 10-Year Treasury note rose above 2.5% for the first time since October 2014, amid near certainty that the Federal Reserve will hike rates for the first time in a year at the conclusion of its meeting this week.
4. U.S. futures point to lower open on Wall Street
Wall Street futures pointed to lower open for the major U.S. indexes.
The Dow futures were almost flat, S&P 500 futures slid 2.37 points or 0.11%, while the tech-heavy Nasdaq 100 futures were down 21.87 points or 0.45%.
There were no major U.S. economic reports scheduled for release on Monday.
5. Trial of IMF chief Christine Lagarde begins
The International Monetary Fund’s managing director Christine Lagarde goes on trial in Paris on Monday over a €400 million payout to a French businessman when she was France’s finance minister.
Lagarde has denied the charges of negligence in approving the payment to Bernard Tapie in 2008.
If found guilty of negligence leading to misuse of public funds Lagarde could face up to a year in jail and a fine of €15,000.
A guilty verdict would also threaten the credibility of the IMF and risk a leadership crisis.