European Rout Continues as Drop in Energy Shares Outweighs Boost to Other Sectors

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Stock Market Trading

: 12 December 2014

European markets are set to slump on the open as overnight declines in commodities batter energy and mining stocks once again.

In the US, better than expected retail sales data had spurred a rebound in the Dow Jones, with the index closing yesterday's session 63 points higher.

Following the significant sell off in the previous three sessions, a bounce back had been somewhat expected.

However, the Dow has resumed its slump overnight and we are now expecting to see drops of more than 1% for the major indices at the European open.

This has come as WTI crude oil broke its psychological $60 dollar handle in after-hours trading and now looks quite settled below this level.

In addition, gold, having had a choppy session that ultimately closed flat on the day, is already flirting with yesterday's lows.

The sustained collapse in commodity prices continues to raise serious questions over the strength of the global economy.

Stock Market Trading

: 11 December 2014

European equities are set to slide on the open once more as the risk off sentiment fails to abate.

Steep falls overnight in the US and Asia indicate that the bears are running rampant and are still likely to be active on the open.

With major European indices chopping around the flat mark for the year, and prospects for the global economy looking dim in 2015, traders won't want to ruin their Christmas by being on the wrong side of the next major move.

As a result, a short-term move into cash looks like it may be the default move for many.

Despite rapidly declining oil prices, OPEC announced a downgrade to its 2015 oil demand forecasts, sparking another sharp sell off in energy stocks.

That in turn led to a significant tumble in the Dow Jones, which lost 245 points to 17,544, the biggest drop since 9 October.

Stock Market Trading

: 10 December 2014

Equities in Europe are set to perk up this morning, tracking an afternoon recovery in the US.

When European markets closed yesterday, it looked as though the bears were going to run rampant across stocks all over the world.

Fresh concerns over growth in China and renewed political turmoil in Greece had sparked a sharp plunge in indices and the Dow Jones was no stranger, led by sell offs in Verizon, Merck and AT&T.

However, after the European close, the Dow was able to pare back the majority of the earlier declines, closing just 69 points lower at 17,793, and this turn around in sentiment should be reflected in today's open.

Whilst it is probably too early to say that investor optimism is shifting, the volatility may suggest that some players are thinking about taking profits off the table as we approach the end of the year.

Stock Market Trading

: 09 December 2014

European equities are set to slump on the open as yesterday's rout continues.

Although lower oil prices should be a positive cue for pretty much every sector other than energy, it's the persistent weakness amongst energy shares that's overshadowing any benefits and dragging down the major indices.

The geopolitical games being played out in the oil market are stirring up a lot of uncertainty and having unintended negative consequences right across the asset spectrum that could ruin many traders' Christmases.

The plunging oil prices have raised concerns over whether a surging US economy can be strong enough to pull the rest of the world out of a slowdown trap.

With energy stocks leading the sell off, the Dow Jones lost 93 points to 17,866 and the index has remained under pressure in overnight trading.

Given that most global equities have seen a nice bounce since mid-October, traders could be forgiven for booking profits as we come to year end.

Stock Market Trading

: 08 December 2014

European indices are set to open fairly flat this morning on a mixed set of global cues.

Overnight news from Asia, that Japan's slump was even deeper than expected and that Chinese trade data had weakened, has taken the shine off sentiment following the knockout Non-Farm Payrolls on Friday.

Japanese annual growth lurched from the previous reading of -1.6% to an even lower -1.9%, whilst a drop in Chinese imports and below expectation growth in exports are all conspiring to paint a weak picture of the global economy.

In contrast, Friday's NFP report indicated that US employers had added 321,000 jobs in November, a record since January 2012, while the unemployment rate was unchanged at 5.8%.

The headline figure surpassed estimates and bolstered investor sentiment in the strength of the overall economy.

That optimism quickly spilled over into the stock market, pushing the Dow Jones to within reaching distance of the 18,000 level.

By Jonathan Sudaria, 12 December 2014

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