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There has also been a large 'forced' sell off of equities from sovereign wealth funds, due to the decrease in oil prices, so they can keep their country operati
by phodo 11y ago
There has also been a large 'forced' sell off of equities from sovereign wealth funds, due to the decrease in oil prices, so they can keep their country operations going. That impacted US company stock prices which might otherwise benefit from lower oil prices.
- siculars 11y agoThis. It is the massive liquidation of sovereign wealth funds that is causing markets to move lower. When someone is forced to sell, what happens to the price? It tanks. There is no floor. Technicals take over. This coupled with expected negative earnings outlook creates a vicious cycle of downward trajectory.
- mcguire 11y ago"This coupled with expected negative earnings outlook creates a vicious cycle of downward trajectory." That's kinda my point: what negative earnings outlook? Lower oil prices means lower costs for every industry but energy. "Developed" markets are mostly oil-importers, and are still (as far as I know) the source of most industries' profits.
- rorykoehler 11y agoSurely this will give an increased incentive to countries divest from oil completely in order to ensure long term economic stability. Take Singapore for example. Oil is cheap for them now which is good from an import perspective but they are also invested in oil with something like 6% of their sovereign fund which is not so good. They also have an abundance of sunshine. It makes perfect sense for them to use this as a catalyst for transitioning to renewables even though in the short term oil is cheap to import.