Buyers flee as oil slumps

Heading into the close, the FTSE 100 is firmly in the red, potentially on course for the lowest close since late 2012.

US traders
Source: Bloomberg

Today’s gains for London lasted barely thirty minutes, as selling, driven heavily by oil prices, put markets back in the red. It seems that fundamentals have been unceremoniously dumped in favour of a constant watch on the oil price, with this metric determining whether stock markets rise or fall.

Weak retail sales provided little optimism for investors, as while this cuts back on the chances of another US rate increase this year, it doesn’t bode well for the overall economy – consumers are supposed to be enjoying the benefit of falling fuel prices, but if this isn’t filtering through then the last vaguely positive impact from the ongoing oil rout appears to have disappeared.

Much of the  damage today in London has been wrought by miners, who have sold off a day after surging; what is becoming clear is that every ‘up’ day for their share prices is the cue for more embattled investors to sell, providing yet more downward pressure.

Looking ahead to next week, we can expect more earnings figures from the US, including the giants of Netflix and Goldman Sachs. Citigroup failed to excite today, with the stock down 5% as international concerns spooked investors. In the coming climate of uncertainty, those banks with a bigger US focus will likely prosper while their internationally-focused peers fall. Central bank meetings in the eurozone and Canada will also be key, with the latter potentially weighing up a cut to rates to help offset the carnage in crude. 

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