US shares managed for a time to stave off the Asian and European weakness last night and today. Stocks initially opened almost +1% higher despite having fallen more than 1,000 points – for a second time – this week. But as the day wore on energy ebbed; closer to 4.30pm UK time the Dow was -0.10% down to 23,836 though the Nasdaq managed to tread water, just.
A similar story mid-afternoon for the FTSE 100, down -0.57% to 7,127. The FTSE 100 is not just under pressure from the global share rout but concern that interest rates will rise quicker and sooner than expected. However by close of business tonight the Big Board had given away more than 90 points to 7,077 with Johnson Matthey shares slumping more than -4%. The FTSE 250 fared slightly better, down -0.80% to 19,172.
The pound got walloped by new Brexit bickering and fears of a rough, acrimonious exit. EU negotiator Michel Barnier warned a transition period should not be taken for granted. “The UK has committed to proposing specific solutions to the unique issue of Ireland,” he also warned. “We are waiting for such solutions.” The sterner EU tone drove the pound down almost -1% by 3.30pm to 1.3795. Expect a weekend of ramped-up political frustration, Cabinet squabbling and growing business unease.
While much of the focus this week has been on plunging stocks, oil has not escaped concern. Rising shale numbers from the US has seen Brent crude clipped to $64 a barrel (US WTI has slipped under $60). Major oil players ExxonMobil and Chevron recently saw lower-than-expected recent fourth quarter earnings, in part down to slimmer refining margins.
BP and Shell appear rather stronger – profits have doubled for both recently – but a crimp to oil prices means the recent bullish mood has been turned down several beats. A recent climb in the dollar spot price has also applied pressure. Energy hedge fund CEO John Kilduff from Again Capital told CNBC he thought oil prices will likely retreat to the mid-$50 mark – soon.
"The dollar index got down to 86 [cents], crude got to $66," he said. "[The] dollar index is now back over 90, crude's back down around $61, ready to break and I think fall back down into the mid-$50s here fairly rapidly."
Despite an earlier lift for US shares by late afternoon the trend was down though the Nasdaq looked better: Apple shares were more than +1% up while Facebook and Microsoft shares surged +1.75% and +2.5% higher. But in Europe the German Dax and French CAC 40 dipped -1% and -1.45%.
In Paris it emerged earlier that beauty giant L’Oreal could be on the verge of snapping up Nestle’s own 23% stake though an asking price of €23bn is not small change given L’Oreal’s €3bn cash pile. “If Nestle one day wants to sell, we are ready,” L‘Oreal’s Chairman and Chief Executive Jean-Paul Agon told the media, Reuters reported.
Breaking news: There are reports Amazon may be readying a delivery service for market. Not great news for UPS shares, down almost -4% earlier.