S&P 500 closed with sharp devaluations, for the fifth consecutive day. The strong rises that Americans indexes reached in the second half of December led to a certain complacency among investors before the threats that had been forming on the horizon. Yesterday, these threats have become evident. The continuous fall of oil price and the heavy losses suffered by European markets led to strong selling pressure on Wall Street. The fact that the American indexes have reached successive maximums during the second half of December also made them vulnerable to the occurrence of corrections.
The fall of oil and the rebirth of the fears in Europe are two factors that correlate with each other. The uncertainty caused by the Greek political situation leads to a devaluation of the Euro against other currencies, especially against the Dollar. The appreciation of the dollar has a negative effect on commodities and more particularly on oil. Affecting the price of this raw material was also the alleged increase in production of some countries like Russia and Iraq. Usually when the price of a good falls its supply decreases; however at this stage this inverse relationship does not hold. Several countries increase production to offset the negative effect on the price decline of revenue. For countries like Russia, Venezuela, Iraq, among others, oil revenues are the main source of public treasury entries.
Some reductions by analysts, also affected investors sentiment, reminding investors that the prices achieved by some stocks can not be fully justified by the fundamentals of their respective companies.
The fall of oil and the rebirth of the fears in Europe are two factors that correlate with each other. The uncertainty caused by the Greek political situation leads to a devaluation of the Euro against other currencies, especially against the Dollar. The appreciation of the dollar has a negative effect on commodities and more particularly on oil. Affecting the price of this raw material was also the alleged increase in production of some countries like Russia and Iraq. Usually when the price of a good falls its supply decreases; however at this stage this inverse relationship does not hold. Several countries increase production to offset the negative effect on the price decline of revenue. For countries like Russia, Venezuela, Iraq, among others, oil revenues are the main source of public treasury entries.
Some reductions by analysts, also affected investors sentiment, reminding investors that the prices achieved by some stocks can not be fully justified by the fundamentals of their respective companies.