Morning Briefing: Oil price drop impacts global stocks

Morning Briefing: Oil price drop impacts global stocks

Morning Briefing: Oil price drop impacts global stocks Oil price drop impacts global stocks
World stock markets have been punished by a decline in oil prices with a 3 per cent drop Monday and further volatility today.

Energy stocks have pushed some of the major Asian indexes to a lower close Tuesday although Shanghai and Tokyo managed gains. Chinese data released in the previous session continues to weigh heavily despite expectation of intervention from Beijing.

European indexes are lower so far with energy stocks and earnings in focus. Data showing stronger lending in the Eurozone has pushed the Euro higher adding further downward pressure on equities. The markets will be closely watching this week’s latest policy meeting from the European Central bank with an extension of the Eurozone’s quantitative easing a possibility.

Wall Street is expected to open lower ahead of housing data with speeches from Fed heavyweights William Dudley and Janet Yellen scheduled during the morning.

Toronto will react to the Liberal party’s victory in Monday’s election.
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North America (previous session)
US Dow Jones 17,230.54 (+0.08 per cent) +5.16 per cent +5.07 per cent
TSX Composite 13,758.38 (-0.58 per cent) +0.82 per cent -4.04 per cent
Europe (at 6.15am ET)
UK FTSE 6,326.83 (-0.40 per cent) +3.65 per cent + 0.95 per cent
German DAX 10,112.07 (-0.51 per cent) +1.98 per cent +15.99 per cent
Asia (at close)
China CSI 300 3,577.70 (+1.23 per cent) +10.04 per cent +45.75 per cent
Japan Nikkei 18,207.15 (+0.42 per cent) +0.76 per cent +20.49 per cent
Other Data (at 6.15am ET)
Oil (Brent) Oil (WTI) Gold Can. Dollar
(-0.31 per cent)
(+0.39 per cent)
(+0.14 per cent)
Aus. Dollar
Oversupply still the focus for oil as prices stabilize
Following a 3 per cent drop in oil prices Monday there has been a more stable trade so far today however the global supply glut is set to increase with Iranian oil next year and low demand will exacerbate the situation. At the annual commodities summit organized by Reuters, Ian Taylor of trading company Vitol said: "If we are above $60 by the end of 2016 I will be a little bit surprised.” On Monday Moody’s said that its forecasts are for $48 on average for 2016, $55 for 2017 and $70 by 2020.
Rhetoric ramps up on British EU exit
The potential for Britain to leave the EY, dubbed as a “Brexit” is drawing strong opinions from both sides of the argument. Those in favor of the UK leaving the EU and becoming a standalone state say that there is “nothing to fear” from the option. The Mayor of London’s economic chief says that without reform staying in the union would see Britain’s influence in the world diminish. Meanwhile the London-based Centre for Economics and Business Research says that staying within a reformed EU would add billions of pounds and almost a million jobs to the economy by 2030. Reform is the key to both messages though with prime minister David Cameron trying to convince EU partners to embrace change.  

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