Good news clouded by record oil prices

There was more good news yesterday.

In Europe, German manufacturing orders surged 2.7 percent in May while manufacturing output in Britain was steady in May compared with April and industrial production rose 0.1 percent.

In the US, the ISM non-manufacturing index rose to 62.2 percent in June from 58.5 percent in May, the Mortgage Bankers Association's seasonally-adjusted index of mortgage application activity increased 9.6 percent to 853.4 in the week ended July 1, with purchase applications up 9.1 percent, and chain store retail sales rose 0.5 percent in the week ended July 2, compared with a 0.6 percent decline the previous week.

The US stock market, however, ignored the good news and focused on high oil prices instead. With NYMEX light crude settling at US$61.28 a barrel yesterday, up US$1.69, the Dow Jones Industrial Average fell 101.12, or 0.97 percent, to 10,270.68, the Standard & Poor's 500 index fell 10.05, or 0.83 percent, to 1,194.94, and the Nasdaq composite index lost 10.10, or 0.49 percent, to 2,068.65.

A fixation on the negative by the stock market is normally not a bullish sign, but I guess a record oil price is rather hard to ignore.