13.11.14 Thursday Afternoon

Oil sinks past psychological barrier as Dow ignores unemployment figures.

Disappointing unemployment claim numbers did nothing to dampen the Dow, which opened 7 points higher at 17618.69. The poor unemployment claims figures, 290,000 instead of the forecast 282k, were countered by positive news from Dow giant Wal-Mart, which jumped 3.2% today to 8176.5. Wal-Mart saw their first growth in seven quarters, as total revenue rose nearly $4 billion to $119 billion, a welcome surprise after sluggish sales throughout 2014. There was other big stock news in America, as it was revealed that Hasbro was in talks to takeover DreamWorks Animation, causing the former’s stock prices to fall 4.3% to 5519.69, whilst billionaire Buffett’s Berkshire Hathaway moved to buy battery company Duracell.

Strong financial stocks, like the London Stock Exchange Group’s 1.7% growth, helped the FTSE100 recover from its brief slide yesterday to resume its six week highs, posting at 6638.8 at its peak. This is despite many big oil producers suffering as oil’s descent continues with no sign of stopping. After a turbulent few months, Brent Crude oil finally plunged lower than the symbolically important $80 per barrel price for the first time in 4 years, slipping to 7941. The combination of the volatile Ukraine/Russia situation, the continued troubles in the Middle East alongside overproduction, lower demand and Saudi Arabian price undercutting has resulted in oil’s dismal display. Oil’s performance has been so bad that Saudi Arabian oil minister Ali Naimi has had to refute claims that this situation is a scheme by the Saudi’s to severely harm the Russian economy, and damage the USA’s shale industry, the ever-growing threat to oil’s energy dominance. Ali Naimi, speaking to Reuters, argued that ‘we do no seek to politicise oil’, and that ‘it’s a question of supply and demand, it’s purely business.’ For all of these calming words, oil companies predictably performed poorly, with Tullow Oil (-4% at 470.15), Royal Dutch Shell (-2.6% at 2162.75) and BP (-1% at 428.2) all having bad days.

In other stocks news, Rexam, the leading producer of beverage cans, announced that their worldwide beverage can volumes grew by 4% this quarter, but this was not enough to assuage investors of the looming costs of aluminium hikes and scary energy figures coming out of Brazil. The markets showed signs of an impending dissatisfaction with Rexam, with stocks falling 0.09% on Monday, and a further 0.77% on Wednesday, hitting 480.95 at closing. The confirmation of investors’ worries led to Rexam going cliff-diving today as prices fell 7.55%, sliding to 440.6, its lowest price in 2014.

Finally, tomorrow is a big day for announcements, with German and French preliminary GDP figures coming Friday morning and US retail numbers arriving mid-afternoon. The former set sees Germany forecast at 0.1% from -0.2%, whilst France is forecast 0.1% from 0.0% last quarter. The latter announcements see US core retail sales predicted to be 0.2% from -0.2% last month, with general retail sales up 0.2% from last month’s -0.3%. However, since June, every forecast in the USA’s retail figures has been inaccurate, bar in September, as each month figures come in lower than predicted. Regardless, the Dow and dollar have seemed nearly impervious in the last two weeks, so it remains to be seen whether any inaccuracies can affect the US market’s upward swing.