OPEC inspired oil slick continues to suffocate global indices

The full force of OPEC’s decisions last week continues to be felt this Monday morning, as all the major indices are down.

As oil reaches a fresh 4 and a half year low, slipping under the $70 per barrel level to open at $68.36, the FTSE continues to regress back from its highs of two weeks ago to open at 6669.8 compared to last week’s close of 6704.8. This comes as energy companies still dominate the big losers of the morning, weighing further on the UK markets. The FTSE then turned its eyes to UK manufacturing PMI for aid; this grew to 53.5 from 53.2, whilst net lending to individuals fell to £2.6 billion from £2.7 billion. These figures saw no immediate change on the FTSE.

The DAX suffered a similar fate as it was dragged down by weak oil and disappointing PMI figures. Unlike this time last week where the German index was riding high on Draghi’s comments, this week saw no good will spill over from the ECB President’s conference last Thursday, as it opened at 9927, 20 points lower than last Friday’s close. This issue was further exacerbated by Eurozone manufacturing slowing down to 50.1.

The Nikkei, which was one of the rare benefactors of cheap oil last week as its airline companies lifted the index due to cheap fuel, slipped this Monday as it dealt with poor PMI figures both from Japan and China. Japanese PMI fell 0.1 to 52.0, whilst China’s fell to 50.3 from 50.8; this led to a Nikkei close of 17452.5 after opening at 17469.5.

A day off on Thanksgiving could not revitalise a flagging Dow, which finally succumbed to worldwide bearish sentiment to end its record run last Friday, closing the week at 17822.5 after opening at 17829.5. Futures point to the US index opening at 17765.5, as news comes that there was 11% less spending this Black Friday than there was in 2013. Spending fell from $57.4 billion to $50.9 billion, proving true the warning of a weak holiday period that was provided by the USA’s disappointing consumer confidence data last week. The Dow et al will be hoping that this negative sentiment will not infect Cyber Monday, traditionally the biggest spending day on the US calendar.

Finally, the economic doom and gloom of this Monday compounded a bad weekend for gold, which received a blow yesterday as the Swiss voted ‘no’ to expanding their gold reserves. As gold looked towards the Swiss decision it closed out last week at $1166.25 per ounce; following the results of the referendum it opened at 1150.15 per ounce. Like oil, gold has no immediate saviour on the horizon, as things look bleak for both commodities. The yellow metal will be hoping that Chinese and American economies can weaken further in order to make gold a viable investment once more.