Global Markets Dragged Downward By Oil Price Slump

Global Markets Dragged Downward By Oil Price Slump

The U.S. markets fell lower on Tuesday morning as falling oil prices continued to weigh on global stock trading.



Global Markets Dragged Downward By Oil Price Slump
Global Markets Dragged Downward By Oil Price Slump

Near midday in New York City, the Dow Jones had fallen 1.64%, while the S&P 500 declined 1.64%. The Nasdaq index also dropped 1.62%. Investors have been concerned about a China-led global economic slowdown, tepid U.S. economic data and the pace of rate hikes by the Federal Reserve. 

It is a busy week on the economic data front, particularly in the U.S., where the week will end with monthly payroll figures on Friday. So far, the numbers released have not impressed investors. On Monday, the Institute for Supply Management said its gauge of factory activity pointed to a contraction, while China’s official survey found that manufacturing had fallen to its lowest level in more than three years. 

These two reports seemed to weigh heavily on oil prices, and the selling pressure continued today. Benchmark United States oil was down $1.24 to $30.38 a barrel on the New York Mercantile Exchange, a day after it plunged nearly 6%. Brent crude was down $1.12 to $33.12 a barrel in London. Energy companies, as has been the case for several weeks now, followed suit and saw their stocks drop lower. Exxon Mobil shares fell 2.5%, and shares of Chevron fell 3.4%.  

The global economy relies more on oil-rich nations for growth. For the last 75 years, almost every economic crisis has been preceded by an oil price spike. The worry now is that low energy prices are pushing the global economy into a tailspin.

While that idea is counter-intuitive, it’s gaining traction – because a growing share of the world’s consumers and investors are in the very places getting hammered by the rout in commodities prices. Apple Inc., for example, blamed weaker sales last quarter on lower economic growth in some oil-rich countries. Oil exporters are facing diminishing returns and may have to cut spending significantly, which would have a further impact on global economic growth. 


This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.