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Lower oil prices seem to be driving the major US indices lower lately. Why is that? Lower energy expenses seems like a good thing for businesses.
by bkjelden 11y ago
Lower oil prices seem to be driving the major US indices lower lately.
Why is that? Lower energy expenses seems like a good thing for businesses.
- JTon 11y agoNot an expert, but I've been read that demand for oil is typically used as a leading indicator for economic growth. Seems like the global economy is slumping, and as a result doesn't need as much energy (oil)
- bkjelden 11y agoAh, so in that case it wouldn't be causal, just a correlation.
- marcosdumay 11y agoIt is causal, but in the reverse direction.
- bradleyjg 11y agoNeither is the cause or effect of the other, they both share a common cause. Viz. worries about China's economy slowing down. Or at least the above is conventional wisdom. No one really knows for sure.
- AnimalMuppet 11y agoIf nothing else, there are oil producers in those indices, too...
- jonknee 11y agoThere are a lot of oil companies in these indices, lower demand for oil (and a host of other commodities!) spells trouble for general export demand, etc. In general China's bubble is bursting and everyone is scared to see what happens.
- dragonwriter 11y ago> Lower oil prices seem to be driving the major US indices lower lately. Potentially, because the oil companies are components of the major indices? Or, potentially, because the oil prices aren't dragging down the US indices, oil prices and US indices are both down because of supply/demand factors which reflect expectations of slowdowns in various markets, and increased uncertainty in the energy sector, both of which are immediate, if not durable, negatives for investors.