On Tuesday, the U.S. stock market traded lower. This came in response to falling oil prices as well as investor flight to safe haven Treasuries which led to a sell off for the second consecutive day. According to analysts, it will be difficult for stocks prices to increase with the growing demand for bonds. It is evident that investors are looking for a fixed income especially with the instability in the commodity market, with falling oil prices. As a result of this, many investors sell and then unwind their long positions. This was evident during Tuesday’s trading session where the Dow Jones Industrial Average (DJIA) recorded its worst start to a new year since the financial crisis in 2008. At the close of U.S. trading, the DJIA was down 0.74%, while the NASDAQ Composite index (COMP) also declined 1.29%. Meanwhile, the S&P 500 index (SPX) suffered a loss for the fifth-straight session and this index is already more than 4 percent off its peak which it reached on the 29th of December 2014.
On Tuesday, the U.S. dollar (USD) slipped against the Japanese yen (JPY). Meanwhile, the euro (EUR) was unable to make a stand against the greenback, struggling near 9-year lows as investor expectations for additional stimulus measures by the European Central Bank (ECB) grow. The EUR/USD currency was last at 1.1905, down 0.22%. This rate was not far from the low reached on Monday of 1.1851 which also marked the weakest level since the beginning of 2006. Meanwhile, the USD/JPY pair traded at 119.05, down 0.47%. The currency pair traded at 119.62 on Monday. With declines in global equity markets, the safe have yen was boosted. This was fueled further with the failing oil prices as well as concerns regarding the eurozone economy. As a result, a selloff in stocks was sparked bringing the broader indices down lower.
Boeing is clearly in demand and this U.S. aerospace giant announced on Tuesday that they had a record year in 2014 for both deliveries and sales in its commercial jet business. The company booked over 1,400 net orders for commercial aircrafts which is valued at $232.7 billion. This broke Boeing’s previous record which was set in 2007 with only one thousand three hundred and fifty five orders. Added to this was a backlog of almost 5,800 unfilled orders in 2014 while the company also delivered 723 airliners. This included one hundred and fourteen 787 Dreamliners which was launched 3 years ago. In December 2014, Boeing announced a 25% increase in its quarterly dividends as well as a $12 billion share repurchase plan. This came as a result of strong operating performance which produced a significant cash flow for the company. Boeing Co. (NYSE:BA) is currently trading at $127.53 a share.
While the oil price has been on a downward hill over the last few weeks, this commodity slightly reversed course on Wednesday during Asian trading. This positive move came in response to upbeat industry supply data out of the U.S. On Tuesday, the American Petroleum Institute reported a drop in stocks. That is, last week, crude stocks dropped four million barrels. Data also showed that gasoline inventories and distillates both gained. On Wednesday, the U.S. Department of Energy is expected to report on supplies and analysts are expecting data to show a gain in crude stocks of 880,000 barrels.
In early Asian trading, crude oil for February delivery increased 0.42 percent to $48.13 a barrel on the NYMEX. On Tuesday, on the ICE Futures Europe, Brent fell to $51.10 a barrel, down 3.8%. As the U.S. dollar (USD) strengthens, the oil price usually weakens. This occurs since oil is a dollar priced commodity. This means that this commodity becomes very expensive for other currency holders. Also, in 2014, once the OPEC (Organization of the Petroleum Exporting Countries) decided to keep its output at thirty million barrels a day despite the shale boom in the U.S., WTI futures dropped almost 46 percent while London-traded Brent prices lost nearly 48 percent. This decline in oil prices has also continued into the New Year with speculations of further declines.