Oil Prices Sink Sharply to One-Year Low

November 23, 2018

The price of West Texas Intermediate crude oil dived 6.9% to $50.44 per barrel. Gold has fallen 0.4%.

There was no trading in Japan due to the Labor Thanksgiving holiday.

The dollar edged 0.2% lower against the yen overnight but rose 0.4% against the euro, 0.3% relative to sterling, and 0.2% vis-a-vis the Swiss franc.

The DOW has declined another 0.5% thus far this Black Friday. Share prices slumped 2.5% in China, 0.6% in India and South Korea, 0.7% in Hong Kong and 0.5% in Taiwan. The British Ftse is off 0.3%, but the German Dax is 0.2% higher.

Ten-year sovereign debt yields continued to retreat, dropping 6 basis points in the U.K., 4 bps in Germany and 3 bps in the U.S., Canada, France and Italy.

Preliminary purchasing manager November survey results for Euroland, Germany and France underscore Europe’s rapidly weakening growth momentum amid such risk factors as political uncertainty, U.S. protectionism, tighter financial conditions, and upwardly trending inflation.

  • Euroland’s composite PMI fell 0.7 points to a 47-month low of 52.4.
  • Euroland’s factory PMI hit a 30-month low, with output at a 65-month low.
  • Service-sector activity continued to outpace manufacturing but nonetheless in Euroland hit a 25-month low.
  • Germany’s composite PMI, like Euroland’s, touched a 47-month low. Manufacturing was at a 32-month low, and services sank to a 6-month low.
  • France’s composite PMI was more resilient, dipping 0.1 to a 2-month low, with services at a 3-month low but manufacturing dropping to a 26-month low.
  • Average business conditions in the rest of Euroland improved at the slowest rate since November 2013.

The deterioration of Germany’s economy was underscored further by revised third-quarter GDP data confirming a 0.2% quarter-on-quarter contraction and a halving of on-year growth to 1.1%. Net exports exerted a 1.0 percentage point drag on both quarterly and annual GDP growth.

Canadian retail sales only rose 0.2% in September following no changed in August. non-auto sales rose 0.1%.

Canadian CPI inflation accelerated to 2.4% in October from 2.2% in September. Core inflation hovered close to the 2.0% target.

The CBA purchasing managers index for Australia posted a preliminary reading for November that shows the fastest rate of improving conditions since June.

CPI inflation doubled in Malaysia to a mere 0.6% in October and remained at 0.7% for a third straight month in Singapore.

Producer prices stagnated on month in Spain during October, trimming the 12-month increase to 4.5%.

Belgium’s business sentiment index rebounded from -1.1 in October to a 2-month high of +0.4 in November.

Mexican third-quarter GDP growth was revised marginally lower to a quarterly advance of 0.8% and a year-on-year pace of 2.5%, which compares favorably with 1.6% in the prior 12-month period through the third quarter of 2017. Mexico’s current account deficit in the latest quarter, $5.08 billion, was slightly greater than $4.97 billion a year earlier and $2 billion wider than the deficit in the second quarter of this year.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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