Global Stocks React to Oil’s Demise

Stocks around the world remained mixed as mounting doubts nearly derailed global recovery. U.S. stocks dipped slightly as investors speculated what would come of Federal Reserve Chair’s looming testimony in congress. Tech shares continued retreating, as corporations got ready to unveil their second quarter reports. Russia’s ruble led declines as oil slumped amidst fears that production caps were being breached. The dollar held steady while the pound enjoyed a robust come back. All eyes are on Britain’s withdrawal from the European Union & investors are treading carefully. It’s been another interesting week, let’s dive into the details!

Global Stocks Fluctuate as Crude Slips

Global Stocks

This may be the end of the risk rally.

“More hawkish comments out of key central banks in the final weeks of the second quarter had many in the markets questioning whether the win-win outcome for investors can really continue,” strategists at JPMorgan Asset Management said in a research note. “Now, especially, investors need to decide which is more important for asset markets: monetary policy or the underlying state of the recovery.”

It appears that this year’s risk rally is finally coming to an end. The surprise headwind that pushed global stocks to all-time highs is losing momentum. Analysts from all sectors are cutting forecasts for company earnings as worried valuations continue to grow. After almost a decade of stimulus, central banks are shifting towards tighter policies. The macro data displayed mixed reactions, since many fear that this new movement could halt global growth recovery. This hawkish rhetoric made bonds extend losses, only heightening fears of more blowback.

Right now investors are keeping their eyes on a slew of important announcements that will be revealed next week. Major players including PepsiCo Inc., Wells Fargo & Co., Citigroup Inc. & JPMorgan Chase & Co. are getting ready to reveal second-quarter results. These reports will show investors where the market stands, & have the potential to revive the risk rally.

Stocks around the world held steady, with some reporting losses that were previously predicted by analysts. The S&P 500 remained unchanged despite growing concerns about the Fed’s next move. In total it fell less than one point, putting it at 2,426.44. The Euro Stoxx 50 Index lost earlier gains after having to face Britain’s immanent withdrawal from the European Union. It recently lost 0.4% after enjoying a 0.4% comeback earlier last week. Despite mixed results the MSCI Emerging Market Index is on the rise. The platform soared by 0.7%, giving investors hope in turbulent times.

Currencies staid steady, despite a few setbacks. While the Russian ruble recoiled to petro-induced problems, the dollar held steady. The Bloomberg Dollar Spot Index gained 0.1%, signaling that the greenback was strengthening against its peers. Not to be outdone, the pound gained 0.2%. This put it at $1.2903, & showed experts that Britain really is ready to leave the European Union. The euro held steady, while the yen weakened 0.3%. This third day of declines put it at 114.33 per dollar.

Out of all the markets, commodities got hit the hardest. West Texas Intermediate crude dropped 1%, putting it at $43.95 a barrel. This unfortunate slip was fueled by data forecasts showing crude stockpiles may extend declines. Fears of a tighter monetary policy wreaked havoc on gold, putting it down 0.3%. This left it at $1,210.51 an ounce, the lowest levels since March.

At the end of the day, the market is scheduled to endure a standard amount of turbulence. Between Britain’s exit & the Federal Reserve’s upcoming decisions, investors are doomed to be in suspense. The market will react accordingly, so we just have to hold on & wait for the market to settle.

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