A late slide in Oil prices yesterday saw US markets drop sharply into the close unwinding the post Fed rally seen in the aftermath of Wednesday’s decision to raise rates. Now that the Fed decision is finally behind us and is now part of history, concerns about the state of the global economy have returned to front of mind and the picture is no more certain than it was at the beginning of the week.
According to a survey of economic conditions in China, carried out by a US based independent body, modelled on the US Beige Book, the overall picture showed that the economy deteriorated in the fourth quarter. The survey pointed to “pervasive weakness” across the board raising concerns about the effectiveness of recent attempts to stimulate a recovery in the world’s second biggest economy.
The decision by the Bank of Japan to expand the range of assets in its QE program to ETF’s by 300bn yen underwhelmed the markets sending the Nikkei sharply lower, while European markets have also slid back this morning taking their cues from the declines in the US and Asia overnight.
Mining stocks have managed to catch a bid early on with Anglo American (L:AAL) rebounding from its recent all-time lows, but with commodity prices likely to remain under pressure, volatility here is likely to continue, inducing significant price swings in the process.
Oil prices have found some support at this week’s lows, managing to hold above the 2008 lows but pressure continues to build up on the downside as inventories continue to build with no signs of any reduction in supply.
Copper prices are also continuing to find support just above $2 which has managed to contain the downside for the past two months.
With little in the way of economic data today US markets look set to open lower on the final trading day of the week as the investors remain wary of loading up on any new positions as we head into year end.
On the reporting front Carnival Corp (L:CCL) are set to announce their latest Q4 trading update, and Darden Restaurants, owners of the Olive Garden, report on their latest Q2 trading numbers, which should give an indication of how well they did over the Thanksgiving break.
The Dow Jones is expected to open 105 points lower at 17,390
The S&P500 is expected to open 14 points lower at 2,028
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