Markets mixed as oil plunge resumes
Markets were mixed on Monday as oil resumed its fall. US stocks fell for a second straight trading session as investor confidence was hit by further plunge in oil prices ahead of the start of the fourth-quarter earnings season. Investors’ earning expectations have become less positive as energy companies’ profits will be hit by falling oil prices. The ICE dollar index finished the day unchanged after falling on Friday as mixed US jobs report indicated hourly wages fell last month. Today at 16:00 CET the November Job Openings and Labor Turnover Summary (JOLTS) will be published in US. The US economy has been creating jobs at a healthy pace during the past year, and the last JOLTS report indicated increase in October job openings to 4.834 mln from previous month’s 4.685 mln level. A higher than expected increase in job openings will likely result in further strengthening the US dollar.
European stocks rose on Monday as investor confidence was boosted by reports the European Central Bank is considering various schemes for launching a quantitative-easing program. According to CNBC report, the ECB is considering a quantitative-easing program where the magnitude of a country’s sovereign debt the ECB would purchase would be determined by the level of paid-in capital contribution made by national central banks into the ECB. The euro slumped to a near nine-year low against the dollar. As ECB is moving towards implementing a monetary stimulus program to support sluggish economy and ward off deflation, the pressure on euro will remain. Goldman Sachs raised its forecast for the dollar to $1.14 per euro in three months from a previous prediction of $1.23. Today at 10:30 CET the December inflation data will be published in UK. The annual consumer price inflation has been below the 2% target for all previous months of 2014, with CPI inflation falling to 1% in November from 1.3% in the previous month. Further slowing of inflation is likely to negatively affect the British Pound as the central bank will most likely refrain from taking measures toward monetary tightening in 2015 while the inflation is falling further away from the 2% target rate.
The Nikkei is falling on the backdrop of falling US stock markets, sliding oil prices and rising yen. The yen rose for a third day against the dollar as the slide in oil prices spurred demand for haven assets. Falling oil prices contribute to narrowing Japan’s trade balance, providing further support for the yen.
Oil continued falling amid speculation that US crude stockpiles increased. As US production reached the highest level of 9.14 million barrels a day through December 12, the most in weekly EIA records that started in January 1983, the United Arab Emirates Energy Minister Suhail Al Mazrouei said yesterday UAE will continue plans to boost its production capacity to 3.5 million barrels a day in 2017 as it pumped 2.7 million a day last month with a current capacity of 3 million.
The soybeans futures tumbled as the US Department of Agriculture said inventories expanded in the US, the world’s biggest grower, and revised upwards the US production data to a record 3.969 billion bushels (108.01 million metric tons) from 3.958 billion in December.
Copper traded near the lowest since October 2009 after falling 1.2 percent yesterday on concern that output is outpacing demand.
Source: ifcmarkets – Markets mixed as oil plunge resumes
