OPEC’s decision felt around the world

As expected, OPEC’s decision to enact no change in production has caused Brent Crude to slide even closer to the $70 per barrel level, opening the day at $72.41.

Like yesterday, oil’s leaky ship has had a negative impact on the FTSE, as the UK index struggles to bear the weight of its multiple energy and oil companies. After closing Thursday at 6716.7, the FTSE opened at 6707.5, as house price growth slowed to 0.3%. This housing figure came on top of Premier Oil haemorrhaging shares as its price fell 12.3% to 189.4, after opening yesterday at 233.2, and today at 212.5.

The DAX finally lost its steam this morning, as Draghi’s comments yesterday couldn’t prevent the German index feeling the force of oil’s slippery slump. It closed yesterday at 9971.2, and opened today at 9975.2; however it quickly fell after the bell to around 9907, and has remained there since. Germany will be looking to the Eurozone unemployment rates and CPI flash estimate in order to try and instil some bullish sentiment back into DAX. The low price of oil has renewed European fears of deflation; the Eurozone will be hoping that the worsening oil situation will force Draghi and co to play their stimulus hand earlier than the first quarter of 2015 suggested by ECB Vice President Constancio.

Despite the global effects of OPEC’s failure to act, preliminary industrial figures of 0.2%, higher than the forecast -0.4%, caused the Nikkie to close higher than it opened, growing 60 points to finish at 17407.5. This was helped by the prominence of airlines on the Nikkei. Unlike the FTSE, weighed down by its energy companies, stocks like Japan Airlines and Nippon Airway jumping by around 5% and 7% respectively meant that the Japanese index could swerve the major effects of oil’s downward trajectory, closing at a two week high.

Oil was not the only commodity in trouble thus morning; gold has continued its disappointing 2014, slipping another 0.5% today to open at $1188.55. Gold has struggled to rise above the $1200 per ounce level recently, and is looking to the Swiss gold referendum on Sunday for help, much like oil looked to OPEC for assistance. However, like OPEC’s lack of aid to oil, gold looks set for another slight fall as Switzerland look likely to vote no to increasing, and repatriating, its gold reserves.

Finally, with the US markets re-opening on shortened hours later today after, it will be interesting to see whether the Dow Jones can continue its record run in the face of the OPEC-inspired oil decline, and the lingering effects of poor US data earlier in the week.