European markets slumped on the final day of a rough first two weeks of the year. Oil plunging back below $30 per barrel and the Shanghai Composite back into bear market territory is fuelling risk-off attitudes.
The FTSE 100 fell below 5850 led down by resource companies after BHP Billiton (L:BLT) wrote down $7.2bn in assets sending the mining sector plummeting with shares of Anglo American (L:AAL) getting walloped by 10%.
The rug got pulled out from under the price of oil again on Friday, with the WTI crude contract losing over 5% to fresh 12-year lows. The renewed downdraft wipes out the short-covering bounce from beneath $30 p/b seen on Thursday. Every time oil falls to another big figure there’s a little bit less of a reason to sell but it’s hard to see many reasons to buy. Friday did bring the makings of a big reason to feel more bullish on oil after Russian pipeline operator Transneft estimated Russian oil shipments would fall by over 6% in 2016. That would represent half of the daily global supply glut and could prompt a cut in production from OPEC to see the supply-demand imbalance that has played a big role in the oil price decline completely redressed.
Automaker shares were lower despite the biggest annual rise in car sales since 2009. Markets are awaiting more details on French police raids of Renault (PA:RENA) factories surrounding the company’s use of emissions technology. The evidence of how damaging the emissions scandal could be for the other automakers is plain to see by looking at Volkswagen (DE:VOWG_p) sales and market share. Volkswagen group sales rose by 4.4% in December, way behind the European car market where sales gained 16%. VW lost market share for the first time since 2007.
US markets look set for a much weaker start in line with the bearishness seen across international markets as shares of Intel (O:INTC) look set to fall following poorly-received results ahead of earnings released by Citigroup (N:C) and Wells Fargo (N:WFC).
USA pre-opening levels
S&P 500: 32 points lower at 1,889
Dow Jones: 271 points lower at 16,109
Nasdaq 100: 88 points lower at 4,272
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