Oil surge drives Equity rout

The traditional September selling in equities really seems to be taking hold thanks to higher oil prices, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

Oil surge wallops equities

The second oil surge in a year has really begun to drag stock markets lower, as it combines with pre-CPI anxiety among investors who already regard next week’s Fed meeting with plenty of trepidation. A sea of red has washed over European markets today, once again hit hard because of their dependence on imported energy. A few more days of surging oil prices, a higher inflation print and then a Fed hike on Wednesday would be a very dangerous cocktail indeed for global markets.

Weak trading looms for rest of September

In mid-term years such as this, the S&P 500 normally bottoms out at the end of September, around a month earlier than in the other three years of the US presidential cycle. But this still leaves traders with a good couple of weeks in which, historically, stocks have performed quite poorly. Thus sellers find themselves pushing at an open door, and while most indices are still well above their April lows, things could get ugly quite quickly.