WTI front month futures extended losses below $44 per barrel, showing the potential for a possible test of the $40 key level in the upcoming trading sessions if the sharp downside momentum continues. In London, energy stocks retreated sharply as Royal Dutch Shell shrunk over 4.8%, while BP, BG Group and Tullow Oil deteriorated between 2.2% and 2.8%.
European equity markets fluctuated strongly in today’s volatile trading session and retreated following ongoing concerns regarding the Eurozone’s economic stability. The CAC, DAX and IBEX fell slightly giving back earlier gains, while the London equity benchmark index slid lower over 0.6% towards 6,750. Investors remained cautious following US FOMC’s hawkish statement as the US Fed signalled that it would not increase short-term interest rates before June 2015.
On the macroeconomic front, Germany’s unemployment remained unchanged at 6.5% in January, while Eurozone’s business climate indicator rose to 0.16 in January from 0.04 in December, beating analysts’ expectations of 0.12. The euro climbed higher to retest 1.135 against the dollar, while the USD index continued its strong upside rally holding above 94.6.
In the US, weekly jobless claims increased by 265K last week below estimates of 300K, showing improving conditions in the employment sector. However, pending home sales dropped sharply -3.7% in December against analysts’ expectations of a 0.5% rise.