Markets Seeking Stability Amid Plunging Oil Prices, Greek Concerns

cgrowthU.S. stocks are trading slightly higher in early trading following yesterdays’ stock declines that witnessed a 300 point decline in the Dow led by economic global concerns related to Brent Crude plunging 3 percent, the euro declining to a 9 year low following the release of weak inflation data from Germany, and political uncertainty ahead of Greece’s upcoming election in late January that could determine their membership in the 19 member euro area.

Today Brent Crude is trading at a 5 1/2 year low after facing a decline of 50 percent in 2014 in response to slowing global growth in places such as China, Europe, and Japan in a new era for oil that has witnessed oil exporting nations competing for global marketshare after U.S. shale producers have increased the overall supply of oil in the market as OPEC refuses to make supply cuts in a bid to drive U.S. shale companies out of business.

Latest economic data released today out of the 19 member euro area shows that economic activity, as measured by manufacturing and services, increased for the 18th consecutive month in December with the latest PMI showing modest growth at the end of 2014. However, the rate of expansion remains at the weakest level in a year and a half.

According to Markit, the final Eurozone Markit PMI Composite for December was 51.4 in December, below the flash estimate of 51.7 but ahead of November’s  51.1.

The yield on the 10 year U.S. Treasury has dipped below 2 percent and is currently at 1.977, reflecting some caution in the global markets following uncertainty over falling oil prices combined with deflation and political concerns out of  Europe in the 19 member euro area.

Yesterday Germany’s economic minister insisted that Germany wouldn’t be blackmailed to offer concessions on Greek debt or terms of Greece’s financial bailout plan after Greece’s leftist party Syriza, which is gaining in popularity, has pushed for write-downs on Greece’s sovereign debts and less fiscal austerity.

-Johnathan Schweitzer

 

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