With the worsening outlook for economic growth in the fourth quarter, we see a fairly rapid adjustment to the new reality of both stock exchange indices and oil prices. It seems that, unlike epidemiologists, investors did not expect the black scenario to materialize during the vacations.
Oil on a monthly basis may count as the biggest drop since March. The reason seems to be the growing epidemic in the United States and Europe, which is associated with further restrictions, and this in turn reduces demand for fuel for cars and planes.
In October alone, WTI oil contracts fell by almost 11 percent. According to Bloomberg agency, sales of road fuels in the UK fell for the fifth week in a row to the lowest level since July. Most European airlines have reduced regional flights in November and December, and infections in the US may frustrate plans to increase flight frequencies by the end of the year. Recently, Libya has increased oil production, which raises concerns about oversupply.
Fewer us on Facebook and fewer iPhone purchases
Friday brings red in the stock markets and major stock indices, and the sentiment was further spoiled by the quarterly results of Wall Street giants. U.S. futures contracts are down on Friday due to concerns about the condition of the technology sector, when the quarterly results of some large companies were disappointing.
iPhone sales dropped by 16 percent, Facebook users in the US and Canada fell, and Twitter users grew below expectations. Amazon shares fell despite good results, while Alphabet shares rose sharply after quarterly results were better than expected. Dow Jones contracts fell by nearly 400 points, and both S&P 500 and Nasdaq fell by more than 1%.
The United States reported 88,521 new coronavirus cases on Thursday, a record daily increase in the disease. Investors' anxiety is also growing before the elections next week. Joe Biden continues to lead the polls.
The euro is weakening. Will the ECB work already in December?
The euro has been falling on the currency market because of the dovish tone of Christine Lagarde's speech at yesterday's press conference after the European Central Bank meeting. The EUR/USD exchange rate fell to its lowest level since the end of September, exceeding 1.1700.
On Thursday, the ECB indicated that more monetary stimulus could be introduced in December. Christine Lagarde also warned that the risks to the economic outlook are clearly tilted down due to the increasing number of COVID-19 infections and new restrictive measures across the continent. Lagarde also said that the fourth quarter will almost certainly be weak, with a very negative November.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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