By IFCMarkets
US stocks edged lower on Friday as investors worry that the first interest rates hike by the Fed since 2006, that is expected on December 16, will raise the corporate credit burden. The probability of the hike is currently estimated at 74%. Further negative for the energy sector came from the WTI prices hitting fresh 7-year lows. S&P 500 slumped 3.8%, which was its biggest decline in 4 months. Dow fell 3.3% while Nasdaq 100 composite fell 4.1%. S&P energy index tumbled 11% since the start of December. This month may turn out to be the worst for the index since 2011. The macroeconomic data was neutral on Friday. The US dollar index slightly edged down (see US dollar index live). The trading volume at the US exchanges was 8.3bn shares which is 18.6% above the average in last 20 trading days. Today in the US no important macroeconomic data is expected.
European stock indices are advancing today less than 1% after their 2% fall on Friday. The pan-European Stoxx Europe 600 is edging up for the first time in 5 days, mainly due to the corporate data. The stocks of the wind turbines producers edged up following the Paris Climate Conference: Vestas Wind (+2,5%), Gamesa (+1,3%) и Nordex (+3,6%). Telecom Italia rose almost 2% after it revealed the plans of its major Vivendi investor to convert the company’s stocks ahead of the tomorrow’s meeting of stockholders. Today at 13:00 CET the European industrial production will be released. At 14:00 CET Mario Draghi speaks on the economy.
Nikkei index fell to the lowest in 6 weeks on Friday (see Nikkei index live). Today it is edging up together with the European indices. Market participants looked beyond the slightly negative 4th quarter Tankan report of the Japanese economy released early in the morning. Next time the important data will be released after December 16 when investors will anticipate the Japanese November trade balance.
Oil prices fell to the 7-year lows after the International Energy Agency report which forecasts the supply glut to persist till late 2016. The Goldman Sachs investment bank expects the slump in prices till $20 a barrel with the main reason being the increasing oil export from Iran and OPEC. Meanwhile, EIA expects the oil production in non-OPEC countries to contract by 0.6mln barrels a day in 2016. The increase in global demand for oil is estimated to reach 1.23mln barrels a day, up from 1.79mln barrels a day in 2015. This year we saw the record growth in oil demand due to its low prices. The production in Russia reached the record 10.78mln barrels a day in November. About 80% of this volume is exported, refined oil included. Russia refused to discuss with OPEC the scenario of the simultaneous oil production cuts. In November the oil export from Iran reached the 6-month high of 1.26mln barrels a day. The number of active oil rigs fell last week by 21 unit which is already the 14th decline in 15 weeks. The current oil rigs count is 524 which is the lowest since April 2010. In the meantime, the oil price hit a fresh low since February 2009.
Gold prices fell today amid the negative forecasts. The BofA Merrill Lynch banks expects them to tumble to $950 an ounce next year. Goldman Sachs predicts the slump to $1000 an ounce. They believe the higher interest rates in the US may contribute to this. The stockpiles of the SPDR Gold Trust ETF reached the bottom since September 2008. Net shorts in silver fell 25% a week, according to U.S. Commodity Futures Trading Commission. In our opinion, this could have pushed the silver prices down. Copper edged up amid the contracted volume of net shorts at COMEX. The positive came from the improved November industrial production in China (+2.6% year-over-year). This increase is record high in the recent 5 months.
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