Spreadex Market Update
Brent Crude plunges to fresh 6 year low as Chevron and ExxonMobil damage Dow
At its worst falling a whopping 4% Brent Crude now sits at its lowest price since March 2009, trading a woeful $41.44 per barrel. Of course this has had major ramifications for an already ugly set of oil stocks and with it the formally flashy FTSE. Premier Oil led the sector’s losses, falling by over 10%, whilst big boys BP and Shell dropped by nearly 3% and 4% respectively. This meant FTSE, which had been so resilient throughout the morning, finally had to relinquish the majority of its Monday growth, dropping from a 40 to a 10 point increase as the day continued.
It is hard to tell what is having a bigger impact on the Dow Jones, the chunky losses for Chevron and ExxonMobil or lingering resentment towards the now almost certain December rate-hike set to appear next week. Given the sharp rise that greeted the (ostensibly) lift-off securing non-farm jobs report last Friday, it is likely that the plunging oil price has created the bigger pressure, even if a bit of dovish drag can’t be completely discounted. Either way the Dow started the day down by around 100 points, in the process lopping some of the more extravagant highs off the European indices.
Whilst the UK and US markets suffered in the face of the latest commodity collapse the Eurozone indices continued to enjoy some spectacular gains, even if they weren’t quite at their midday peak. The DAX held onto a 180 point jump, only 40 way from its day highs, whilst the CAC surged by 60. It seems that Mario Draghi’s weekend comments went a decent way to restoring investors’ faith in the silken-tongued ECB president, helping the region’s indices recuperate a large chunk of last Thursday’s losses.
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