On Monday, U.S. stocks fell for a second straight session. This came in response to major declines in energy shares as a result of falling oil prices while investors also turned their attention to the corporate earnings season. Oil prices fell an additional 5% after Goldman Sachs cut its short-term price forecasts for the commodity while OPEC has also shown no signs of reducing output despite the global supply glut. At the close of U.S. trading, the Dow Jones industrial average (DJIA) fell 0.54%, or 96.53 points, to 17,640.84, while the Nasdaq Composite index (COMP) dropped 0.84%, or 39.36 points, to 4,664.71. Also on the downside was the S&P 500 index which declined 0.81%, or 16.55 points, to 2,028.26. In response to falling oil prices, the S&P energy index declined by 2.8% which marked the biggest drag on the SPX.
On Tuesday, the Australian dollar (AUD) gained. This came in response to positive trade gains out of China despite declining oil prices. The AUD/USD currency pair traded at 0.8178, up 0.26% while the USD/JPY traded at 118.24, down 0.10%. Meanwhile after the data, the EUR/USD traded at 1.1841, up 0.07 percent while the U.S. dollar index fell to 92.19, down 0.07 percent. In data released on Monday, China stated that exports in December rose by 9.9%. Imports declined by 2.3 percent while China also posted a trade surplus of $49 billion. Meanwhile in Japan, which opened after a holiday on Monday, posted data on bank lending in December which showed a gain of 2.7% year-on-year. In November, there was a 2.8 percent rise while the November current account balance came in at a surplus of ¥910 billion.
In afternoon trade on Monday, the shares of Google Inc. (GOOGL, -0.73%) fell by `1.3 percent. This marked the lowest level for the search engine giant in over a year. As a result of negative comments from analysts in Wall Street, Google shares were in reach of a bear market for the first time in three and a half years. According to analysts, a bear market is defined by a decrease of more than 20 percent so if these shares reach $488.54 or below, a new bear market will be triggered for Google stocks. The decline of Google’s Class A stock on Monday also marked the ninth loss in the last ten sessions. Since the beginning of 2015, the value of Google shares has declined by 6.9 percent. Since reaching an all-time high of $610.68 on the 26th of February 2014, Google shares have slid by 19.1 percent. In Las Vegas last week, at the 2015 Consumer Electronics Show, Jay Srivatsa, an analyst from Chardan Capital Markets listed Google as one of the biggest ‘losers’ of the show.
Global oil prices are not getting the support it needs and on Tuesday, benchmark Brent crude fell for the 4th consecutive trading session to its lowest level in more than 5 years. This decline in oil prices came despite positive crude import data out of China. U.S. crude and Brent have both fallen for the last seven weeks and are now at their weakest levels since April 2009. By 0500 GMT, Brent for February delivery was trading at $46.55, down by more than one dollar a barrel while U.S. February crude was down 76 cents and trading at $45.31 a barrel. This came after the commodity hit a session low of only $45.18 a barrel. Adding to the declining oil prices was Goldman Sachs who lowered their forecast for U.S. crude from $73.75 to $47.15 a barrel and for Brent, from $83.75 to $50.40 a barrel. To top it off, ABN Amro, a Dutch bank also cut is outlook to $55 a barrel for U.S. WTI crude and to $60 a barrel for Brent in 2015.