Although oil prices stabilize after tumbling Thursday, the near-term outlook remains weak. The front-month contract of WTI crude oil price is hovering around 73 in European session as stock markets continue to fall. The chart below shows that the correlation between crude oil price and equities has surged again since mid-January.
Natural gas storage dropped -115 bcf to 2406 bcf in the week ended January 29. The decline was less than market expected and widened the difference between current inventory and 5-year average to 6.6%. Gas price slumped after the disappointing result but managed to close flat at 5.416.
Gold price extends the decline to 1050 after the support at 1074/75 was broken. While risk is to the downside in the near-term, cheaper gold price can attract buyers from central banks, especially those in emerging economies.
PGMs’ correction is steeper than gold as they are more leveraged to global economic recovery. Moreover, massive liquidation of long positions over the past few weeks is also a reason for the sharp fall in recent days. Platinum palladium has lost -6% and -11% respectively in this week’s broad-based selloff.
Stock markets slump in both Asian and European session Friday as investors remains worried about debt crisis in the Eurozone and employment outlook in the US. In Asia, the MSCI Asia Pacific Index slipped -2.6%, the biggest single-day decline in 10 weeks. In Japan, Nikkei 225 Stock Average dropped -2.9% to 10057. Strength in Japanese yen dampens export markets in the country. Hong Kong’s Hang Send Index plummeted -3.3% to 19665, the first close below 2000 since September 2009. Benchmark indices for Taiwan and Korea also fell more than -3%.
In Europe, stocks dip for a 3rd day amid concerns about fiscal problems in Greece, Spain and Portugal. Germany’s DAX Index slides -1.6% to 5446 while France’s CAC 40 Index loses -2.6% to 3595. In the UK, the FTSE 100 also drops -1.8% to 5046.
The markets will likely move around current levels ahead of the US payroll report.
