Industry Movers: Oil & Gas Act as Drag as Crude Oil Futures Hit by Recession Worries
Commodity bets were the worst at the weekend as recession fears replaced inflation fears following the Federal Reserve’s surprise 75 basis point interest rate hike the previous day. .
“Investors are now firmly convinced that some sort of US recession is inevitable, and therefore likely in other parts of the global economy as well,” said Chris Beauchamp, chief market analyst at IG.
“Given this outlook, we should expect risk rebounds to be short-lived. Whether this specter of recession changes the central bank’s focus on growth rather than inflation will be a key debate over the summer.”
Against this backdrop, Brent crude oil futures fell around 5.6% to $113.12 a barrel on the ICE.
Meanwhile, copper ended the session down 2.35% at $4.0295 per pound on the COMEX.
Nonetheless, overall Friday proved a mixed session for the FSTE 350, with the second-tier index up more than 1.0%, although the top-tier index slipped despite falling 0.9% of the value of the pound against the US dollar.
Incidentally, JP Morgan analysts noted that globally, downward revisions to earnings per share estimates consistently outnumbered revisions on both a monthly and quarterly basis.
“We continue to believe that it is difficult to expect another round of EPS upgrades (or fewer downgrades) when 1) bond yields are high, 2) oil prices are rising, 3 ) the USD strengthens and 4) central banks continue to raise interest rates.
“Put simply, accelerating EPS downgrades rarely support rising stock prices.”
Bank of America strategists, meanwhile, have raised the possibility of a bull market rally in 2023, especially once the U.S. dollar peaks in the second half of 2022.
Best performing sectors to date
Automobiles & Parts 1,792.62 +3.75%
Software & IT Services 1,593.99 +3.60%
Beverages 26,728.84 +2.05%
Leisure goods 15,276.82 +2.00%
Personal Property 26,619.63 +1.40%
Worst Performing Sectors So Far Today
Oil, gas and coal 6,974.50 -5.11%
Industrial Metals & Mining 6,983.12 -2.78%
Industrial transport 2,754.34 -1.86%
Investment banking and brokerage services 11,517.79 -1.51%
Electricity 9,805.29 -0.52%