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Oil-Related Shutdowns Spreads Across All Industries


Today's financial recap and tomorrow's financial outlook.

In the wake of a historic day in the energy markets, commodities bounced today as the US dollar fell. The US dollar index (DXY) dropped by by 0.44% in today's session. Crude oil bounced by 4.78% after dropping by 8.6% on last Friday, which had been the largest decline in more than five years. Many energy companies and the banks that hold their loans took a major hit as the drop in oil prices spurred worries of increased defaults in the sector.

Gold was the largest standout because it reversed by $80 (or about 6.5%) from its overnight low to its high. The Swiss referendum to return all foreign-held gold to the country and force the Swiss National Bank (SNB) to hold 20% of its currency reserves in gold was decisively voted down. The final vote tally saw a 77% to 23% margin for a "no" vote.

The S&P 500 (SPX) started weak and ended that way as the financial and energy sectors, and their tertiary industries, were the biggest drag on the major indices. Other transports stocks that produce oil tanker equipment, such as Greenbrier (GBX), also suffered major losses in today's session. Apple's (AAPL) 3.5% reversal was also the cause of the drop in equity prices as it has been the poster child for the latest rally. Recent chip production estimates were reduced significantly as holiday sales fell short of expectations.

The national ISM manufacturing index declined less than expected to 58.7 as most of the orders and production components remained strong for a second month. However, the substantial drop in the prices paid component put many market participants on edge. Prices paid dropped down to 44.5 from 53.5 in the month prior, which embodies the major drop in commodity prices over the last two months.

Tomorrow's Financial Outlook

Tomorrow there will be very little economic data in the US, as it normal during the week that the government payrolls report is released. October construction spending and November auto sales will be released tomorrow. Market participants will also be watching to see the results of Cyber Monday sales.

Overnight, the Reserve Bank of Australia (RBA) will make its monthly rate decision. Although it is not expected to cut rates at this meeting, the drop in commodity prices lately has spurred speculation that it has the proper cover to do so in the future because it feels that the price of the Aussie dollar (AUD) is too high. The AUD has dropped substantially in recent months in line with the declines in copper and iron ore.

There are no major earnings reports scheduled for tomorrow in the US.

Twitter: @Minyanville

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