Daily Stock Market Update: Oil Supply Concerns Revived – Feb. 3, 2016


Crude oil oversupply concerns regained the spotlight in recent trading sessions, forcing credit rating agency S&P to dole out another round of downgrades on energy companies. According to the American Petroleum Institute, crude oil stockpiles rose by 3.387 million barrels last week while other energy supplies also rose.

WTI crude oil dipped below $30/barrel again to a low of $29.47/barrel while Brent crude oil slipped to $32.50/barrel towards the end of the New York session. US equities closed lower, with the Dow 30 down 295.64 points to 16,153.54 (-1.80%), the S&P 500 index down 36.35 points to 1,903.03 (-1.87%), and the Nasdaq down 103.4 points to 4,516.9 (-2.24%).

The S&P 500 VIX, which is considered a gauge of market uncertainty, rose by 2.00 points to 21.98 (+10.01%) to indicate a rise in risk aversion.

European markets down by more than 2%

Equity indices in Europe also closed lower for the day, with the German DAX down 176.84 points to 9,581.04 (-1.81%) and the French CAC 40 down by 108.34 points to 4,283.99 (-2.47%). The Euro Stoxx 50 is down 72.22 points to 2,948.79 (-2.39%) and the London FTSE is down 138.09 points to 5,922.01 (-2.28%).

Data from the UK came in weaker than expected, as the construction PMI showed a sharp drop from 57.8 to 55.0 instead of the projected dip to 57.6. The services PMI is due today and a fall from 55.5 to 55.4 is eyed. Thursday has the Bank of England monetary policy statement, Inflation Report, and MPC meeting minutes lined up.

NZ jobs, dairy auction, and AU trade balance disappoint

Asian markets are currently in the red after seeing disappointing results from New Zealand’s dairy auction and Australia’s trade balance. The auction yielded a sharper 7.4% fall in prices compared to the previous 1.4% drop, indicating that the dairy industry is still facing headwinds. Meanwhile, Australia showed a 3.54 billion AUD trade deficit, wider than the projected 2.45 billion AUD shortfall.

The Nikkei is down 505 points to 17,258.52 (-2.66%), the China A50 index is down 130.39 points to 8,729.47 (-1.47%) and the S&P ASX 200 is down 102.72 points to 4,890.60 (-2.06%).

According to RBNZ head Wheeler, they are open to cutting interest rates again sometime this year, owing to the fall in commodity prices and external risks. US ADP non-farm employment change data is lined up next, along with the ISM non-manufacturing PMI data.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.