A sharp sell-off in energy companies pulled US stock indexes modestly lower Wednesday, wiping out small gains from the day before. The broader All Ordinaries Index is down 43.60 points or 0.77 percent to 5,584.60.
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GLOBAL MARKETS: In Europe, Germany’s DAX fell 0.4 percent, while France’s CAC 40 dipped 0.4 percent. The surprising jump in U.S. government oil stockpiles weighed on the S&P 500 and Dow Jones indices, which closed 0.29 percent and 0.20 percent down respectively.
KEEPING SCORE: Hong Kong’s Hang Seng index was almost flat at 22,489 after shifting between gains and losses.
The Dow Jones industrial average .DJI fell 37.39 points, or 0.2 percent, to 18,495.66, the S&P 500 .SPX lost 6.25 points, or 0.29 percent, to 2,175.49 and the Nasdaq Composite .IXIC dropped 20.80 points, or 0.4 percent, to 5,204.59. South Korea’s KOSPI edged up 0.2 percent to 2,048.80.
Asian shares pared early losses to turn mixed.
ANALYST QUOTE: “All eyes will now turn to Friday’s retail sales figures from the US, which could provide the market with some direction”, said Alex Furber, senior client services executive at CMC Markets.
A broad European equity index declined after some disappointing corporate results and the dollar weakened as investors sought direction on the timing of a potential US interest rate hike. The Paris-based agency, which consults oil-importing nations, lowered its forecast for demand growth next year to 1.2 million barrels a day from 1.3 million barrels a day previously.
Crude inventories rose 1.1 million barrels in the week ended August 5, compared with analysts’ expectations for a decrease of 1.0 million barrels, the U.S. Energy Information Administration (EIA) said.
“The biggest risk to the market at the moment is a huge drop in oil prices”, James Woods, a strategist at Rivkin Securities in Sydney, told Bloomberg news.
“The market remains weak in the mid term, and the rebound in the number of active rigs continues to add to concerns about global oversupply”, EY services oil and gas head Sanjeev Gupta said in a note.
In Asia, yields on 10-year benchmark New Zealand bonds fell to 2.18 per cent after the Reserve Bank of New Zealand cut its official cash rate by 25 basis points to a record low of 2.0 per cent as widely expected.
“Once we saw inventories this morning, that certainly moved energy far lower and dragged nearly everything else down”, said Tim Dreiling, regional investment director for The Private Client Reserve of U.S. Bank.
The rate reduction was in line with market expectations, and the bank indicated more cuts may be required to spur the economy. The so-called kiwi dollar jumped by more than 1 percent after the announcement before easing a little to trade at $0.73.
Oil prices fell after the second-biggest weekly draw in USA gasoline stocks this summer was countered by an unseasonal growth in crude stockpiles.
Oil prices entered a “bear” market last week, having fallen more than 20 per cent from peak levels above United States dollars 50 a barrel seen in early June, and closing below USD 40 for the first time since April.
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CURRENCIES: In currency markets, the dollar rose to 101.39 yen from 101.20 on Wednesday. For the protection of AP and its licensors, content may not be copied, altered or redistributed in any form. The euro weakened to $1.1167 from $1.185. AP material published by LongIsland.com, is done so with explicit permission. This includes the preparation of derivative works of, or the incorporation of such content into other works.
