On 07 December, 2015 – Sliding oil prices drag down stocks

Stocks were mixed in Europe and Asia. However, US indices were dragged down by sinking energy stocks.
United States
An energy-sector rout intensified Monday, as mild weather forecasts sent oil and natural-gas prices plunging and prompted widespread selling of energy-company shares. Traders said some of the heaviest declines came in the shares of companies with heavy debt loads, which are perceived as the most vulnerable to a further downturn in energy prices amid a historic bust. Many oil and gas companies took on large debt loads to fund domestic drilling projects when energy prices were higher. The Dow Jones industrials and S&P both lost 0.7 percent while Nasdaq was 0.8 percent lower.
Oil prices plunged to seven-year lows Monday on expectations that producers around the world will continue pumping crude in an already oversupplied market. The moves, which came after the Organization of the Petroleum Exporting Countries agreed Friday to maintain current production levels, also triggered a broad rout in energy stocks that rattled markets Monday.
Energy companies closed sharply lower, leading a broad decline on the stock market after the price of oil dropped to its lowest point in nearly seven years. Exxon Mobil and Chevron tumbled while airline stocks rose on the prospect of lower fuel costs. Delta Air Lines, Southwest and JetBlue Airways advanced. Chipotle Mexican Grill dropped after the restaurant chain warned late Friday that an outbreak of E. coli linked to its restaurants had caused sales to plunge by as much as 22 percent in recent weeks. Keurig Green Mountain shares soared after it agreed to be acquired by a private equity firm. Office Depot plunged after regulators said they would challenge a proposed purchase of it by rival Staples for $6.3 billion. Staples also dropped. Stocks of gun makers are soaring on the prospect of big sales amid a push for greater gun control following the San Bernardino shootings. Smith & Wesson Holding rallied.
Europe
European markets were mixed at day’s end Monday. Gains were sparked by dovish comments from European Central Bank President Mario Draghi on Friday in New York. Draghi commented that the central bank would step up its stimulus efforts if needed. Draghi said the easy policy is having its “intended” effects, and the bank sees “no particular limit” to how it can use various tools. However early gains crumbled thanks to weakness in oil prices. Energy stocks were among the weakest after the price of Brent fell below $42 per barrel. The weak performance of the US markets also contributed to the souring of the mood among investors. The FTSE slipped 0.2 percent but the CAC, DAX and SMI advanced 0.9 percent, 1.2 percent and 0.3 percent respectively.
Merck fell after announcing the suspension of an experimental cancer drug trial. But Fresenius, Fresenius Medical Care and Bayer advanced. In Paris, Technip and Total retreated. In London, Serco Group dropped after the company announced that its revenue and trading profit will decline further in 2016. Kingfisher and Next declined on broker downgrades. Royal Dutch Shell, BG Group, BP and Tullow Oil declined as did BHP Billiton and Antofagasta. Novartis gained in Zurich. Electrolux tumbled in Stockholm after General Electric abandoned the sale of its appliances business to the Swedish white goods giant.
Germany’s industrial production rebounded in October after declining for two months. Industrial production rose a calendar-and-seasonally adjusted 0.2 percent on the month.
Asia Pacific
Stock indices were mixed to begin the week on Monday. Gains were tempered by low oil prices and caution ahead of the slew of Chinese data later this week. US stocks rallied on Friday after the upbeat November employment data and ECB President Mario Draghi’s reassurance that the central bank would step up its stimulus efforts helped support underlying sentiment.
The Shanghai Composite was 0.3 percent higher, helped by gains in tech and healthcare companies on hopes Beijing will step up efforts to restructure its economy. The Hang Seng however, slipped 0.1 percent after some late selling.
The Nikkei added 1.0 percent as a weaker yen bolstered exporters’ shares as investors waited for Tuesday’s revised July to September GDP figures. Canon, Sharp, Hitachi, Panasonic, Sony and Honda Motor advanced. Energy-linked shares including Inpex and Japan Petroleum retreated. Fast Retailing and Fanuc were up while mobile carrier Softbank closed marginally lower. Takata plummeted after Japan’s transport ministry ordered automakers to phase out the use of Takata air bag inflators by mid-2018.
Both the S&P/ASX and All Ordinaries edged up 0.1 percent despite positive construction and job advertisements data. Santos, Oil Search and Woodside Petroleum were down after crude prices fell below $40 a barrel in the wake of OPEC’s decision to maintain production despite a global glut. BHP Billiton advanced but Rio Tinto and Fortescue Metals Group declined.
The Kospi was 0.5 percent lower but the Taiex added 0.7 percent. The Sensex lost 0.4 percent.
Global Stock Markets

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
China posts November merchandise trade balance. The Eurozone reports revised third quarter GDP. France releases October merchandise trade. In the US, October JOLTS will be released.
*Note — all releases are listed in local time.