Wednesday, 9 December 2015

Markets fall but drop in oil prices may boost economy

Markets fell on Tuesday, again weighed down by weak commodity prices.

The S&P 500 fell 0.7 percent, with the energy sector in particular falling 1.5 percent.

The STOXX Europe 600 fell 1.8 percent. Some of Europe’s biggest miners were hit especially hard. Glencore tumbled 6.9 percent, Anglo American plunged 12 percent and Rio Tinto dropped 8.4 percent.

In Asia, the Shanghai Composite Index sank 1.9 percent while the Nikkei 225 fell 1 percent.

Oil continued its decline on Tuesday. Brent crude fell 1.2 percent while US crude oil fell 0.4 percent.

Some economists, though, think that lower oil prices will boost the economy.

Peter Dixon, an economist at Commerzbank, said that the drop in oil prices “does help to stimulate demand by leaving a little bit of money in the pocket and providing a feel-good factor”.

Michala Marcussen, global head of economics at Societe Generale, estimates that since 2014, the world has enjoyed a windfall equivalent to 2 percent of gross domestic product it would otherwise have spent on crude.

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