It lasted less than 24 hours – lifting shares and some commodities (but not oil) in the US on Thursday morning, our time, then Asia, on into Europe, and onto the US for a second time, where it came to a shuddering halt overnight.
Led a rising US dollar, gold prices fell sharply, oil weakened, along with US gas prices, copper and other metals lost ground and US sharemarkets dropped by around 1%.
It was the sell-off many had expected after the rise in rates the day before.
The Dow slid 1.4%, and Nasdaq lost 01.3%, the S&P 500 ended 1.5% lower – with a large slice of the fall happening in the late in the day. In fact all lost an additional 0.3% to 0.5% in the final minutes of the day’s session.
As a result our market will start with a fall of around 25 points this morning after Wall Street’s fall.
Iron ore prices provided a small positive – the 4th daily rise in a row – this time up 0.7% to $US38.50 a tonne, from its prior close of $US38.20 a tonne.
Gold fell $US25 an ounce (who wants to hold it when US interest rates are rising and will go on rising?). The slide in oil has been joined by the slump in US gas prices (more bad news for BHP Billiton).
Down they went again overnight to $US1.75 per million British Thermal Units, the lowest for years. Gas prices have fallen more than 10% in the past week as the warmest US autumn on record.
This is very bad news for BHP Billiton as it faces the impacts of falling oil, iron ore and copper prices – US shale gas is flooding out of fields, especially in Texas and America has more unsold gas than at any time in recent history.
The Aussie dollar eased by around a cent to 71.20US cents (which was expected) and will probably drift lower as the greenback edges higher.
Key US money market interest rates (such as the Fed Funds rate) rose to reflect the 0.25% rise in official rates – a sign the Fed’s credibility remains solid with investors and traders.
But the big black hole is the oil market and it is driving the wider markets.
January WTI crude futures fell 57 cents, or 1.6%, to settle at $US34.95 a barrel in New York, the lowest settlement since February 2009. In London, February Brent crude futures lost 33 cents, or 0.9%, to $US37.06 a barrel.
Oil fell because of a combination of the US dollar rally overnight and continuing surprise at the way IS oil stocks are rising – they rose 4.8 million barrels to hit a new 80 year high for this time of year last week.
Not even the looming end to the US ban on oil exports (it could come as early as tonight, or at the weekend) helped steady US prices, even though WTI crude is now trading at a premium to Brent crude in the forward months.
And January natural gas futures ended at $US1.755 per million British thermal units, down 3.5 cents, or 2%, and the lowest since March 1999.
Copper prices led other metals prices lower, falling 1.4% to just over $US2.04 a pound on Comex in New York.
