After weak retail data out of the U.S. and after the World Bank cut its global growth projection, European stocks fell on Wednesday. The Stoxx Europe 600 index (SXXP, -1.48%) was dragged down by U.S. stocks, falling 1.5% to 339.67. Indices in the U.S. opened sharply lower as a result of low retail sales data as most stores posted poor results during the supposedly busiest month of the shopping season. European stocks were also negatively impacted by a decline in mining stocks as a result of falling copper prices. Copper is now trading at low levels last seen in 2009 and this comes as a result of a supply glut as well as reduced consumption in China. As a result, the FTSE 100 (UKX, -2.35%) in the United Kingdom dropped 2.4% to 6,388.46 as this index is heavily weighted by commodity-related shares. Meanwhile, on Tuesday, the World Bank stated that they expect the global economy to only expand 3% in 2015 and not 3.4 percent as previously forecast.
Despite weak U.S. retail sales data released yesterday, the U.S. dollar (USD) remained broadly supported close to 12 year highs against the other major currencies. According to a report by the Commerce Department in the U.S., retail sales dropped 0.9 percent in December. This was down from expectations of a 0.1% decline. Meanwhile the retail sales for November were revised from a previously reported 0.7% gain to a gain of only 0.4 percent. Also on the downside was core retail sales which dropped by 1.0 percent in December. This excludes automobile sales and the report missed expectations for an increase of 0.1 percent. The EUR/USD traded at 1.1791, down 0.16% while the USD/JPY currency pair was also down 1.05 percent to 116.69. Also, the U.S. dollar index was at 92.21, down 0.24 percent.
On Wednesday, the shares of Tesla Motors Inc. (NASDAQ:TSLA) traded at $192.69 per share, down almost 6%. This declined came in response to comments from the company’s CEO, Elon Musk, regarding poor sales in China. Appearing at the 2015 North American International Auto Show™ in Detroit, Musk gave the heads up warning that the sales for the fourth quarter in China would be down. As a result of these comments, a sell-off after market was prompted and as a result, the company’s stock price fell below $200 for the first time since May 2014. Falling oil prices have also negatively impacted the company since it is said to work against the sales of electric cars. Over the last 6 months, Tesla shares have declined by 15% and they are almost $100 away from the 52-week high of $286.04 which it reached on the 4th of September 2014. Next month, we will get some more insight into Tesla’s fourth quarter performance when luxury car maker Palo Alto will release its 4th quarter and annual results.
Crude oil prices continued their downward decline on Thursday after a volatile trading session on Wednesday where Brent crude futures gained by 4.5%. This marked the biggest percentage gain for this commodity since the middle of 2012. Despite this gain and as a result of a global supply glut, the tone remains bearish for oil and on Thursday, Brent fell to $48.50 a barrel, down 19 cents. Meanwhile on Tuesday, Brent hit its lowest level since March 2009 and traded at $45.19 a barrel. Also on the downside was U.S. crude which declined by 10 cents to $48.38 a barrel. In a note released on Thursday, the ANZ Bank stated that they see a 60% chance that Brent would trade between $40 and $60 a barrel in the first half of 2015 and that there is a 30% chance that prices will fall between $35 and $45 a barrel during the same time. The bank also stated that there was only a 10% chance that prices would increase to $60 to $80 a barrel.