Market hung over after midterms excitement

As the US midterm election mists clear the markets are trying to decide what to do next. Thursday’s bounce in the US is being followed up by a weaker Asian session and a lower opening in Europe, but there is a lack of a clear signal to firmly take the markets in one direction or other. The scaremongering on Wall Street continues with a number of famous traders calling the end of the equity bull run, frequently without any numerical proof.

Commodity stocks are suffering all over the place, with copper and oil prices on the decline, the latter losing 20% since mid-October. Antofagasta, BHP Billiton and Anglo American bore the brunt of a mining selloff, losing between 2.80% and 3.20% this morning.

Saudi pondering oil market shake up

The oil market may be heading towards a deeper shakeup than just the usual whiplash in reaction to rising reserve levels. Now Saudi Arabia is carrying out a study on possibly leaving the oil cartel OPEC, potentially in light of the recent friction with the US over the killing of a dissident Saudi journalist. OPEC production has been the driving force behind the oil price for decades but with Saudi being the biggest member, the Arab kingdom always carried the heaviest weight when it came to deciding production levels. Having said that, Russia, which has superseded Saudi to become the largest single global oil producer, is not part of any organisation and sets is own production levels based on domestic budgetary requirements. This may be a tempting prospect for the Saudis.

Retail spending drops again in October

The brief sunny moment retail stocks had yesterday has come to an end this morning as data showed that shop spending fell in October by 2% following a 2.7% decline in September. Next, Marks & Spencer and Burberry all traded lower on expectations that a weaker start to the key Christmas shopping period would not be made up in November or December. UK consumers remain cautious despite the fact that domestic wage growth is accelerating, being put off by price inflation and concerns over Brexit. With little economic news to prop it up the pound lost ground against the dollar and the euro trading down 0.39% and 0.17% respectively.

The struggles of the retail sector has now been a recurring theme in UK stocks since data started emerging after the January sales - there has been little to prop up the market in retail shares since then. As we enter the key pre-Christmas shopping frenzy, CEOs and sales directors will be struggling to find answers to what looks like a systemic problem more than simple economics.