No magic fix as worldwide markets see a dismal end to the week

There is no Christmas miracle in sight as Brent Crude oil’s perpetual plunge pulls on the prices of worldwide indices.

Surprise! Oil did it again! After dropping below the previously professed support levels of $85, $80, $70 and $65, Brent Crude today fell below its latest bottom of $63 per barrel to spend much of the day trading at around $62.50. Analysts are now being more realistic with their oil support levels, with a growing consensus that $50 per barrel could be its nadir. However, these predictions have been increasingly optimistic, and with no white knight on the horizon, there made be no stopping oil’s decline in the immediate future.

The FTSE’s torrid tale will have no happy ending today, as it shed more points in one week than it has done for 3 years. After this morning’s construction output data arrived with a thud, and oil continued to wow everyone with its ability to keep falling, the FTSE stood no chance of a last minute rally, as it traded at around 6368.

The UK index is going to have to take control of its own destiny next week if it wants to reverse its fortunes; oil is not going to rally any time soon, so the FTSE will be looking for bullish sentiment from the UK’s economic data next week. Especially important will be the results of the bank stress tests, as well as Mark Carney’s comments on the Bank of England’s interest rate plans, which came under scrutiny this week from the BCC. Another poor week of data will cripple the FTSE going into 2015; a strong UK showing could help it cauterize the wounds caused by the oil-price crisis.

Bar a brief rally on Thursday, Europe has suffered the same fate as the UK, with a dismal week for the DAX and the rest of the Eurozone indices as the ongoing oil situation exacerbated an already precarious economic situation. Industrial production figures for the entire Eurozone fell, from 0.2% to 0.1%, adding more fuel to the QE fire burning in Europe. However, today saw the Eurozone indices buck their recent trend of reacting to bad news positively, as there was nothing to suggest today that Draghi would bring forward his quantitative easing plan.

Finally, the US markets could escape the same fate as their global neighbours, with the S&P500 suffering its worst week since January, and the Dow Jones perilously close to the same fate. After yesterday’s strong showing from US data, today could only disappoint, as both PPI and core PPI were lower than expected, at -0.2% and 0.0% respectively. Despite the US house passing a $1.1 trillion budget bill to narrowly avoid another government shutdown, the US markets couldn’t provide any rally at open this afternoon.