Summary:
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Oil plunges below $60 in another heavy day of selling
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CAD mixed after headline inflation jumps
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Norway terminates energy subsidies for crypto miners
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DE30: PMIs give no reasons to cheer
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Stock of the week: Johnson & Johnso
It’s been one-way traffic for the price of crude of late with wave after wave of selling hitting the market and sending it sharply lower. Today’s session has seen new lows for both Oil and Oil.WTI with both benchmarks declining over 5%. There’s not been any new fundamental developments to support these declines as it seem to be more a case of an extension to an already major downtrend which has seen huge declines in the past 7 weeks from October 3rd, which has seen a slump of 32%. This week alone, Oil is down by 12% and set to post a 7th consecutive lower weekly close.
The last major economic data of the week has caused some fairly sharp moves in the Canadian dollar, which initially surged higher but has since come back under pressure. The reason for the initial rally was a better than expected read in headline inflation, with the CPI for October coming in at 2.4% Y/Y against median estimates of a 2.2% gain. The prior reading was unchanged at 2.2%. While this number often attracts the immediate attention, the 3 associated core measures are believed to matter more for the BOC and on this front there was no change. This saw CAD pull back and trade mixed on the day by the European close.
The underperformance of the cryptocurrency sector continues on Friday. The major digital coins take a step back with Dash (DASH) and Ethereum Classic (ETHERCLASSIC) being one of the biggest laggards. Bitcoin (BITCOIN), the biggest and most famous cryptocurrency, is taking a minor step back today trading close to previous lows. The capitalization of the whole cryptocurrency market dropped to $141.5 billion. Norwegian government decided that bitcoin miners will now pay a standard rate per kilowatt hour, which is 34.5 times higher than what was charged earlier. A number of cryptocurrency mining companies decided to move their operations to Norway due to favourable climate conditions, that led to lower cooling costs, and energy subsidies. However, now it cannot be ruled out that we will see a massive exodus of those firms from the country.
The German GDP report for the third quarter of the year was released in the morning. The headlines did not come as a surprise as it was the final revision. Growth remained at 1.1% YoY and -0.2% QoQ as signaled in the previous release. However, this time investors were offered contribution from various sectors. Preliminary PMI indices for November from France and Germany were released in the morning. Data for France showed further deterioration of moods in the manufacturing sector. The German reading was even worse with drops seen in both manufacturing and services gauges. Having said that, it should not come as a surprise that the print for the whole bloc was also weaker than expected. The manufacturing index moved lower from 52 pts to 51.5 pts while the services gauge declined from 53.7 pts to 53.1 pts. The manufacturing index moved to the lowest level since mid-2016 getting really close to the contraction threshold. After all this it’s been a fairly quiet day for the DE30, with the market trading a little higher at the time of writing.
