Falling oil drags energy stocks and FTSE lower

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Black Friday’s falling prices were mirrored in the falling stock markets, however, that’s where the similarities ended. Whilst these Black Friday sales are expected to break records, bargain hunters on the financial markets were few and far between. Heading into the close the FTSE was firmly in the red, dragged lower by energy stocks, as oil struck a one year low.

Brent plummeted below $60 per barrel, falling from a four- and half-year highs of $85 per barrel, hit as recently as October. Oil supply, particularly from US producers, continues to outpace global demand unnerving investors. Throw into the equation expectations for slowing demand as global growth loses momentum and the outlook for oil is starting to look very bleak.

Saudi Arabia has suggested a possible production cut of 1.4 million barrels per day.  Traders have as good as shrugged off these suggestions. This firstly highlights the level of concern over the outlook for oil. But secondly, it highlights the need for further confirmation from Saudi Arabia and OPEC regarding their intentions. The silence from Saudi Arabia since the initial comments if anything has unnerved the markets further. The timing appears all too convenient; President Trump, a supporter of low oil prices stands by the Saudi’s in the wake of the Khashoggi assassination. One can only assume that there has been some quiet deal on the side….?

Thin post-Thanksgiving trading is the straw that broke oil’s support. WTI has headed through $50 and Brent is sub $60.

Wall Street opened on the back foot following the public holiday. Energy stocks dragged the broader market lower as did nerves over the upcoming G20 summit next week. Little progress appears to have been made between China and the US ahead of the meeting. This means realistically that we can’t expect much progress between the two leaders when they meet in Buenos Aires.

Euro lower on slowing growth concerns

In the currency markets the euro was trading lower as concerns over eurozone growth refused to disappear. PMI data for the region showed that eurozone business activity growth slumped to the lowest rate in four years. Manufacturing was hardest hit owing to weakened global demand and rising political uncertainty amid growing trade war tensions. Whilst the service sector fared marginally better, growth was still at the slowest pace in two years. Add into the equation slowing employment growth and suddenly weak Q3 GDP data no longer looks like an anomaly.