A sell-off in commodity-sensitive names weighed on markets for a second consecutive session yesterday. The S&P 500 ended 0.6% lower, with Energy and Material companies among the worst performers.
A report from the International Energy Agency (IEA) projecting lower oil demand for this year and 2018, in combination with higher than expected inventory data in the US, led to a 0.5% decline in oil prices. Base metal prices also had a weak session as Copper lost 0.3%, iron ore fell 5% and nickel settled 0.8% lower.
Positive US economic data reversed an initial decline in the dollar – at one stage the dollar fell to $1.1860 against the euro before strengthening into the close to finish broadly unchanged.
On the economic data front, US core inflation rose to an annualised rate of 1.8% last month, coming in ahead of expectations. US retail sales also beat expectations, rising 0.2% month-on-month.
European equities also closed lower yesterday. The Euro Stoxx 50 index fell 0.3, the German DAX index lost 0.4% and the UK’s FTSE 100 closed 0.5% lower. Energy and Materials stocks broadly mirrored the performance of their US peers, contributed the most losses to European indices. Telecoms, on the other hand, outperformed.
In the UK, the September unemployment rate was in line and steady at 4.3% – still at a 42 year low, while the average weekly earnings growth remains low but was slightly above expectations at 2.2% year-on-year.
Japanese equities bounced 1.5% overnight, bringing a run of 6 consecutive negative sessions to an end. All sectors finished in positive territory with the exception of Energy, which fell 1.5%.