Markets mixed as oil slide continues - 14.1.2015

World markets were mixed on Tuesday as oil continued falling. US stock market started the trading session with a rally but the early gains were reversed by midday and the market ended the session slightly lower, recording triple-digit swings in the key benchmarks. Positive reports released on Tuesday indicating that the labor market is improving as November job openings rose to 4.97 million from October’s 4.83 million, and a measure of small-business confidence rose in December to the highest level in more than eight years didn’t boost investor optimism sufficiently to overcome concerns over global deflation as oil slide continues. Dollar continued strengthening as the ICE Dollar index, which measures the dollar’s strength against a basket of six major currencies, rose 0.35% to 92.2980. Today at 14:30 CET December Advance Retail Sales numbers will be published in US. Retail sales are expected to contract which may have a limited negative effect on US dollar, unless an actual reading indicates a surprise rise in retail sales which will contribute to the US dollar strength. At 16:00 CET the November Business Inventories number will be released. A lower than expected actual reading for inventories growth rate may have a positive effect on US dollar.

European stocks rose on Tuesday on reports the European Central Bank is considering a sovereign-debt buying program to stimulate the euro-zone economy and stave off deflation. Euro extended its losses against dollar and declined to nine-year low amid expectations the ECB will launch an extensive stimulus program at its meeting on January 22. Bank of England Governor Mark Carney said in an interview with BBC that the ECB and President Mario Draghi have made it “very clear” that investors can expect “considerable asset purchases” in the months to come. Another factor of pressure on euro is the political uncertainty surrounding the Greece elections.

The Nikkei closed down 0.6% on Tuesday on worries about global economic outlook and impact of falling oil prices. The yen rose for a fourth day against the dollar as falling equities and concern over global economic slowdown boosted haven asset demand. Japanese stocks are falling today. Tomorrow November Machine Orders and December Domestic Corporate Goods Price Index will be released in Japan. Core machinery orders are expected to rise, indicating capital spending is picking up, which may positively affect the yen.

Oil fell for a fourth day, extending losses from the lowest close in more than five and half years as Ali Al Yabhouni, the United Arab Emirates’ governor to the Organization of Petroleum Exporting Countries, said yesterday the market may recover only when demand improves later this year.

Gold fell yesterday, trading below 12 week-high on the backdrop of slowing global economy and the prospect for higher US borrowing costs. Industrial metals fell on concern that global demand will not be enough to eliminate a supply glut after the World Bank revised downward its forecast for global growth in 2015. The world economy will expand 3 percent in 2015, down from a projection of 3.4 percent in June, according to the World Bank’s report released yesterday. Copper tumbled the most in almost six years to below $5,400 a metric ton as the demand for the metal in China, the world’s biggest user, is forecast to slow this year while supply rises globally.