Oil hits US prices: Morning market insights

Wall Street

The New York Stock Exchange fell for a second day overnight.

Energy stocks were hit by a fall in the oil price, while an index of companies dependent on economic growth fell, and a US commerce department report showed that bookings for durable goods (products meant to last at least three years) advanced more slowly than project.

But financial stocks continued their recent rally with Bank of America (up 1.56%), American Express (up 1.44%) and JP Morgan Chase (0.83%) all improving.

US Federal Reserve chairman Ben Bernanke said in a television interview yesterday recent news had been good. “But I think we need to be cautious and make sure this is sustainable,” he said.

“And we haven’t quite yet got to the point where we can be completely confident that we’re on a track to full recovery.”

James Paulsen, a chief investment strategist at Minneapolis-based Wells Capital Management, told Bloomberg: “Investor jitters have been heightened by another economic report coming in a bit light and by the Fed chairman suggesting the economy may be vulnerable to another period of turbulence.

“The sell-off is also being fuelled by a collapse in energy stocks. After such a significant advance in the market, investors are already worried about a correction.”

The S&P500 Index was down 0.49% to 1405.54.

The Dow Jones Industrial Average declined 0.54% or 71.52 points to 13126.20.

The NASDAQ Index finished down 0.49% to 3104.96.

West Texas Intermediate (WTI) oil was down 1.65% to $US105.56 a barrel overnight.

Gold was down 1.42% to be trading at $US1663.70 an ounce.

The Australian dollar was weaker overnight, buying $US1.0389 at 8.30am AEST.

Europe

European sharemarkets were down for a second consecutive day after Europe’s central bank governing council member Jens Weidmann said boosting the euro area’s rescue funds would not solve its debt crisis.

“Just like the Tower of Babel, the ‘wall of money’ will never reach heaven,” Weidmann said in a speech at Chatham House in London today. “If we continue to make it higher and higher, we will, in fact, run into more worldly constraints.”

But Italy’s technocrat Prime Minister Mario Monti, a non-political appointment brought into the job to put Italy on an even financial keel, said in Tokyo today the euro area’s problems were “almost over”.

The London FTSE 100 closed down 1.03% to 5808.99.

The German DAX dropped 1.13%, or 80.10 points, to 6998.80.

In London, global insurer RSA Insurance Group (RSA:LN) was down 7.51% to 107.10 GB pence. It is down 12.57% for the past 12 months.

In Paris gas and fuel giant Total (FP:FP) was down again 1.40% to 38.02 euros. Total’s Elgin platform leak in the North Sea entered its fourth day as France’s biggest oil producer said it would take at least six months to drill an emergency well to stop escaping gases.  Shell shut the neighbouring Shearwater field to guard against explosion, according to Bloomberg.