Oil prices slipped on Thursday after hitting fresh 2003 lows yesterday on oversupply worries, after Iran reentered the world stage following the sanctions relief, promising to pump an additional half a million barrels, and possibly a million more one year after the relief. The International Energy Agency has warned on Wednesday of markets getting "drowned in oversupply", exacerbating the oil free fall.
Brent crude futures inched down three cents, or 0.11% to $27.85 a barrel, not far from their 2003 low at $27.10, while U.S. crude futures edged down nine cents, or 0.32% to $28.26 a barrel, within striking distance of their 12-year low at $27.56. Standard Chartered's analysts expect prices to slump to as low as $10 a barrel before finding a bottom to bounce off it.
The Canadian dollar hit its lowest in almost 13 years yesterday at C$1.4685, but a spate of surprisingly positive manufacturing and wholesale sales data tipped the balance the other way, while a decision by the Bank of Canada to keep its interest rate the same at 0.5%, instead of cutting it as expected, sealed the deal for the loonie, which pushed back against its southern rival to trade finally at C$1.4501, edging steadily away from its crushing nadir.
From Asia, China's stocks dipped at the end of their volatile session, with the Shanghai index recording a loss of 0.40%. Japan's Nikkei tumbled 1.42% to a 14-month trough at 16,183, as Japanese exporters take a hit from the recent strengthening of the yen. Hong Kong's Hang Seng index dropped 1.07%, while South Korea's KOSPI barely moved down to 1,844. Bucking the bearish trend however, Australia's S&P/ASX 200 index muscled up half a percent to 4,864.
Wall Street closed at its lowest level in over a year, as energy shares extended their plunge. S&P 500 gave up 22 points, or 1.17% to close at 1,859. Dow Jones fell 249 points, or 1.56% to 15,766. NASDAQ had a surge at first, but ended down 5 points, or 0.12% at 4,471.
Investors await a host of important events and data today, from Europe; the European Central Bank will have its first meeting of the year. While it is expected to leave its benchmark rates unchanged, traders will analyze the words of the subsequent press conference to take any clues about the future decisions.
From the United States, initial unemployment claims for the week ending January 15 are expected to drop to 278K, from the previous reading of 284K, which would be positive for the dollar.