The stage is set for a fall of a few dollars in oil prices. Why? Because of deteriorating economic conditions, as illustrated by the recent weakness in equities. The Nasdaq Composite Index lost 1.90% yesterday, while its cousin, the S&P 500 Index, finished the day 1.12% lower.
Tuesday’s day of atonement in equities caused by the misgivings of powerful bankers has turned out to be a short-lived affair. After all, their predictions were for a future correction which might occur withing the next 24 months, not on some random day in November and only lasting for 24-hours and some 1 to 2 percent at worst.
It is impossible to overestimate the significance of the tech sector in shaping sentiment in equity markets, and fears of overstretched valuations were always to emerge. It came yesterday, together with rising anxiety about the global factory activity. Japan’s manufacturing sector shrank at its fastest pace in 19 months.
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