The end of January, when markets raced higher, seems such a long time ago. Major indices are rapidly shedding the gains they made in the second half of January, as a cocktail of worries returns. The first of these is the oil price, which has rediscovered its old habit of diving like a stone, helped in no small part by the absence of any rumours about another OPEC meeting.
The session started with oil firms in the red, as BP’s results sent the shares into a tail spin, but the company has been joined at the bottom of the index by miners and insurers. The former are down as economic growth concerns take centre stage, with this concern not helped by warnings from Fed policymakers, while the latter are in retreat thanks to China, which appears to be coming up with new and creative ways to try to stem capital flight. The reaction is probably overdone where the likes of Prudential are concerned, but it is hard to remain positive when the tentative rally of the past two weeks is slipping from your grasp.
Adding to concerns was ExxonMobil, which is down 3% as the earnings beat fades amidst the stark reality of a remarkable slump in profits. As crude prices slide once more, thanks to markets suddenly waking up and remembering the massive oversupply story, it looks like this sector will be the trailblazer for any renewed slump in stock markets.