USA investors woke up to a serious jolt Monday when the Dow Jones industrial average tumbled 1,000 points minutes after the market opened in a wave of selling that circled the globe after a historic plunge in Chinese stocks. Both the USA oil and Brent crude jumped over 2 percent Thursday.
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Nothing’s safe as investors who piled in are suddenly retreating and nobody’s around to buy the dip, said Michael Antonelli, an institutional equity sales trader and managing director at Robert W. Baird & Co.in Milwaukee. “Pessimism had grown to such a level that enough cash had been raised on the sidelines to sport at least a short-term rally”.
“Corporate earnings could provide some support, especially if the energy and commodities sectors are not as miserable as everyone expects”, said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany. The US economy should show better growth, however, as consumers should eventually spend most of their oil price windfall compared to the 40 per cent or so they are spending now.
The Standard & Poor’s 500 Index slid 2.5 per cent to 1890.28 at 4pm in NY, its lowest close since September 29.
Asian shares were mostly higher overnight although the Shanghai Composite Index did fall around 73 points to 2,949. South Korea’s Kospi was down 0.9 percent at 1,900.01.
“The comment, “… there’s not many positive drivers”, has certainly been true. The report underscores the challenge facing policy makers heading into their meeting later this month: The labour market is strengthening without triggering signs of higher wages or inflation more broadly.
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The downward spiral of oil prices prompted another investment firm – Morgan Stanley – to reforecast its outlook on oil prices saying a strengthening greenback could push a barrel down to $20.
The EIA said USA crude inventories rose by 0.2mln barrels compared to the previous week and stands now at 482.6mln barrels.
Slumping prices are a critical signal that the boom in lending in China is “unwinding”, according to Adair Turner, chairman of the Institute for New Economic Thinking.
Energy stocks rose sharply, with Exxon Mobil notching the biggest gain among Dow components, rising just shy of 5 per cent. Chevron shares also added around 5 per cent.
This is why oil prices are likely to start moving higher as the year progresses. Exports fell in dollar terms but the decrease was smaller than November’s.
BONDS AND CURRENCIES: U.S. government bond prices fell. “Everyone had forgotten that is part of the market”.
The 12/4 effort happened near resistance with the market overbought.
United States government debt prices gave up earlier gains. Instead, corrections will be made in a blog post or in an article. “But now, it’s the drink that’s stirring us”, Kelly said.
Meanwhile, it’s reported in today’s Irish Times that if oil prices remain at around $30 per barrel or lower this year, the Government here could collect up to €260m less in Value-Added Tax from fuel sales than its projections when the last budget was announced. “The bulk of the movement took place roughly a year ago”, Stanley said.
In the banking space, ANZ Banking, National Australia Bank and Commonwealth Bank are higher in a range of 0.4 percent to 0.6 percent.
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“Any perceived benefit to banks from higher interest rates has been swamped by renewed concerns about a slowdown in global growth”, Antonelli said.
