Stock markets around the world mostly fell yesterday as oil prices showed no sign of escaping their downward spiral, prompting further losses in the beleaguered energy sector.
Losses were broad in the US equity market, with eight of the 10 primary S&P 500 sectors down. Energy was by far the weakest group, off 2.3 per cent, with the sector down more than 25 per cent from a high reached in July.
US crude futures slumped 4.2 per cent to $46.32, the lowest level since 2009, while Brent crude lost 5.25 per cent as Goldman Sachs slashed its short-term price forecasts and Gulf producers showed no signs of curbing output.
Wall Street opened with slight gains, suggesting a rebound from a two-week decline that took the S&P 500 back into negative territory for the year. But the weight of the energy drag overtook any optimism about the upcoming earnings season.
“Since the beginning of the precipitous sell-off in the commodity price, we have seen very few days where you would have a three per cent move in crude and see stock prices hold onto gains,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
“Investors have a lot of other things to think about... but in reality, we are either going to focus on energy prices or earnings will kick in and they will shift their focus to fundamentals.”
S&P 500 earnings are seen rising four per cent in the fourth quarter, according to Thomson Reuters data, sharply under the 11.1 per cent growth rate forecast on October 1.
Energy profits are seen dropping by more than 20 per cent.
While few companies have reported thus far, Tiffany & Co cut its full-year forecast after holiday sales fell from the prior year. The stock plunged 12 per cent.
The Dow Jones industrial average was down 89.71 points, or 0.51 per cent, at 17,647.66.
The Standard & Poor’s 500 Index was down 15.28 points, or 0.75 per cent, at 2,029.53.
The Nasdaq Composite Index was down 37.40 points, or 0.80 per cent, at 4,666.67.
The MSCI International ACWI Price Index fell 0.4 per cent. European shares were volatile, moving between losses of 0.4 per cent and gains of 1.1 per cent. They last traded up 0.6 per cent.
The US dollar index rose 0.1 per cent against a basket of currencies, while the euro was little changed at $1.1838. The yen rose 0.1 per cent against the dollar.
Gold prices rose 0.3 per cent while silver dipped 0.3 per cent. Copper lost 1.2 per cent in its fourth straight daily decline.
In the bond market, the benchmark 10-year US Treasury note traded up 9/32 in price to yield 1.9362 per cent. Spanish and Italian 10-year yields slipped after Italy’s central bank chief said on Sunday the risk of deflation in the eurozone should not be underestimated. He said the best way to tackle the problem was to buy government bonds.