The U.S stock market edged slightly higher overnight, with the Dow Jones industrial average up 82 points, or 0.47%, with airline and energy equities such as Boeing and Chevron contributing the most to the gains. The NASDAQ was also in the green, finishing 22 points up, or 0.44%, with Apple shares gaining 0.48% at the conclusion of U.S trading.
U.S unemployment claims for December were higher than forecasted, at 282,000, 13,000more claims than in the previosu month. Analysts attribute the higher figure to holiday seasonal adjustments and general market volatility. This announcement comes a week before the Dec 15-16 Federal Reserve meeting, in which the markets anticipate an over 80% probability that the Federal Reserve will lift rates from their all-time low, for the first time since the 2008 Global Financial Crisis.
West Texas Intermediate Crude for January delivery slumped to its lowest level since 2009, dropping 40 cents to US$36.76 a barrel on the New York Mercantile Exchange. This on the backdrop of OPEC, the 13 nation Oil cartel, announcing that they have pumped more Oil in November than any other month since 2012. OPEC also decided recently to not cut back production which has added to concerns that the market is being flooded with supply while demand from emerging economies and China further diminishes.
European markets were mostly lower. In London the FTSE100 contracted 34 points or 0.6% overnight , to 6,092.35, after UK based sports retailer Sports Direct International Plc fell 10.97%. The German DAX gained 0.06%, to 10,598.93, up 8.16% year-to-date. The European benchmark index STOXX 600 declined, down 0.3% at the conclusion of yesterday’s trading.
The Bank of England decided to leave interest rates at record lows yesterday, sighting tumbling oil prices contributing to lower levels of inflation, enabling them to continue with their accommodative stance.
In Australia, the S&P/ASX 200 fell 0.8% yesterday, even with a better than expected unemployment rate of 5.8%. The main drivers contributing to yesterday’s decline being the major banks, with the Commonwealth Bank (CBA) tumbling 1.7% and Westpac (WBC) falling 2%. However, BHP Billiton (BHP), which has fallen over 30% year-to-date regained 1.9% in yesterday’s trading.
With the U.S benchmark West Texas Intermediate Crude falling to a 6 year lows following the closing of U.S trading energy shares will likely remain under pressure in the medium-term as there are no signs of a turnaround.
Author: Simon Herrmann
Dec 11, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.