US stocks finished higher on Monday though oil prices hit record low. The Dow Jones Industrial Average closed 0.7% higher at 17251.42 and the Nasdaq Composite rose 0.9%. The S&P 500 gained 0.8% with all ten sectors closing in the black. The dollar weakened and the live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, fell 0.3% to 98.3800. Equities have been tracking lower oil and commodity prices recently. The continued slump in oil and commodity prices points to weakness in global demand for commodities and analysts are debating whether there will be a Santa rally this year, which usually starts before Christmas and lasts until the first few days of January. In economic news the Chicago Fed National Activity Index for November came in below expectations, falling to negative 0.3 from 0.17. Today at 14:30 CET third quarter GDP final reading will be released in US. The tentative outlook is negative. At 15:00 CET October House Price Index will be published by Federal Housing Finance Agency. The tentative outlook is positive. At 16:00 CET November Existing Home Sales and Richmond Fed Manufacturing Index will be released. The tentative outlook is negative.
European stock market indexes closed lower on Monday dragged down by falling energy shares. The euro rose against the dollar with weaker commodity-linked emerging-market currencies spurring reversal of carry trades by investors who had bought emerging-market currencies by selling borrowed euros. The Stoxx Europe 600 index ended 1.1% lower, Germany’s DAX 30 fell 1% to 10,497.77. The Spanish IBEX 35 lost 3.6% after the ruling party lost its parliamentary majority in Sunday’s general elections. Investors are worried that the anti-austerity Podemos party and the liberal Ciudadanos, which won about a third of the seats, may form a coalition and hinder the implementation of austerity reforms imposed by euro-zone rules. German statistical office data indicated German producer prices recorded the sharpest annual drop in almost six years, falling 2.5% year-over-year in November as decline in energy prices continued. Today GfK Consumer Confidence Index for December and Import Prices for November came in better-than-expected. No more important economic data will be released in euro-zone today.
Nikkei edged down 0.2% today in a thin trade ahead of a national holiday on Wednesday to observe the emperor’s birthday. Japan’s government kept its economic assessment unchanged in December saying the economy is in a gradual recovery trend with steady consumer spending and stronger domestic demand improving corporate profits. However it kept the downbeat assessment of exports due to China’s economic slowdown and concerns on global growth.
Oil futures prices are rising today with the start of peak-demand winter season in northern hemisphere after hitting record lows on Monday. Brent futures for February delivery fell 1.4% to $36.35 a barrel on London’s ICE exchange, the lowest settlement since July 2004. Outlook for oil remains bearish with no change in supply and demand fundamentals as major oil producers keep flooding the market and demand is expected to be lower due to global economic slowdown and warmer temperatures. Analysts at Goldman Sachs investment bank estimate $20 oil is possible in 2016. Expected increase of crude oil exports from Iran after international sanctions are lifted is another bearish factor for oil prices.
