Stocks across the world opened lower Tuesday as oil oversupply continues to drive prices downward.
Wednesday, December 31, 2014
Additionally, eurozone economies felt the pressure of political uncertainty in Greece, which will likely prevail until elections are held in three weeks.
In the last full day of trading for European indices, the Stoxx Europe 600 declined 0.4%, Germany’s DAX 40 fell 0.7%, France’s CAC 40 dropped 0.7%, and the UK’s FTSE 100 lost 0.6%. The European stock market closes at 8 AM EST on New Year’s Eve, while US stocks have a full day. The S&P 500 lost 0.3% and the Dow retreated by 0.2%.
ECB fights against persistent economic weakness
The recent trend in oil and the upcoming snap elections in Greece have dampened an already-wounded European economy, MarketWatch reported. The European Central Bank had been battling low inflation and stagnant growth – now those foes have received reinforcements.
Greece’s parliament failed to support the government-elected presidential candidate, which forced snap elections. The vote will be held on January 25, meaning there will be three weeks of uncertainty – a detriment to the market.
Such uncertainty is something “that the region certainly doesn’t need at the moment and instead of officials solely needing to focus on ways to stimulate the economy, they now also have to monitor Greece,” Stan Shamu, market strategist for IG, explained to MarketWatch. “ … Headline risk will be the dominant theme and any changes in poll numbers are likely to drive price action.”
Oil price slide shows no signs of slowing
Global oversupply has pushed oil prices downward since June – a trend that continued on Tuesday, reported The Wall Street Journal. US production of shale oil has surged, while other global suppliers failed to reduce output, creating an oil glut that has driven prices lower.
“US shale players seem to be putting the brakes on but the inventories there are still very high,” Thina Saltvedt, senior oil analyst at Nordea Bank in Oslo, told The Wall Street Journal. “What is more, there is no indication that any of the other major producers will make a radical cut anytime soon … We have an excess of 2 million barrels a day and that isn’t going away anytime soon.”
Any oil producer that lowers its output would likely lose its market share to competitors, so none are likely to volunteer to take one for the team.
Beat uncertainty with Nadex
Investors who want to make smart trades in the midst of a volatile market could turn to binary options through Nadex. These unique contracts have short-term expirations, reducing the chances of the market shifting against the investor, and low collateral, so a loss is not devastating. Additionally, binary contracts have a set maximum loss and profit, so investors know exactly how much they stand to gain or lose at any given time. When the market is unstable, these binary options offer another route.
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.