By IFCMarkets

World stock markets were mixed on Friday. As OPEC left the output level unchanged, the daily drop in oil prices was the largest since May 2011 and reached 7%. Amid this data, S&P energy index tumbled 6.3%. Stocks of oil companies Exxon Mobil and Chevron fell 4.2% and 5.4%, respectively. Stocks of shale oil companies such as Denbury Resources, QEP Resources and Newfield Exploration dropped about 15%. Cheap oil reduces expenses of transportation and aviation companies, as well as retailers. Stocks of Delta Air Lines rose 5.5%. S&P 500 Retailing upped 1.4%.

Followed up the week and November, the US stock indices rose. Today at 14-45 СЕТ Markit Manufacturing PMI is to be released in the US. At 15-00 СЕТ we expect the release of ISM Manufacturing index. The forecast for the first index is slightly positive, for the second one – moderately negative. Two Fed officials will be delivering their speeches at 17-15 and 18-00 СЕТ. For more information about macroeconomic data for this week, please watch our weekly video overview. According to the US National Retail Federation, the volume of retail sales in the United States over the weekend and Thanksgiving Day slipped 11.3%, compared to last year. It may hammer stock indices.

As released on Friday, inflation and unemployment in the euro zone remained unchanged in October compared to November. This morning European indices have dipped as the Chinese Manufacturing PMI in November hit the 8-month low (50.3 points). Market participants are concerned that it may reduce the demand for European goods. Another negative factor that affected European markets was the weak Markit Manufacturing PMI performance in Germany, France and Italy. At 9-00 СЕТ the same indicator for the euro zone will come out. There will be no macroeconomic data releases for today.

Nikkei has risen in the morning as yen hit the 7-year high, a bit above 119 yen per US dollar. Moody’s Investors Service lowered the credit rating of Japan to A1 from AA3. Now Nikkei is going down under the pressure of weak data from China. Other Asian stock indices fell altogether. Note that a weak exchange rate of the national currency provides substantial support for Japanese exporters and bolsters the stock rise. The same as in Europe, due to falling oil prices stocks of airlines were traded higher.

A slowdown in Chinese industrial growth affected commodity futures. The most affected resulted to be copper prices. In China copper is used as a guaranty for commercial loans.

As expected, oil prices continued to fall. OPEC members have begun to revise their budgets for next year. Some investors deem that Brent crude oil would stay in the range of $64-68 per barrel, as the lowered price will make the oil production unprofitable at the most part of world’s oil fields. Note that the next OPEC meeting is scheduled for June.

Precious metals have fallen in price, as the Swiss referendum didn’t approve the decision to increase the share of gold reserves of the country. In our opinion, the prices may stop falling for some time, since the majority of players had already sold gold. Gold stockpiles of SPDR Gold Trust reached a 6-year low of 717.6 tons. Pure gold imports into China via Hong Kong in October rose to 77.6 tons from 68.6 tons in September. The Reserve Bank of India cancelled unexpectedly the existing requirements for gold importers. For this reason, according to Indian Bullion and Jewellers Association outlook, gold demand in India would rise up to 900 tons per year.

Wheat prices have climbed after the announcement of possible export cuts from Russia due to phytosanitary control tightening. We believe it is likely to happen as mutual economic sanctions were imposed.

Market Analysis provided by IFCMarkets