Market commentary: OPEC forecasts declining demand for oil

US

US stock fell on Wednesday following a sell-off in energy shares after OPEC cut its forecast for crude demand in 2015.

Oil Companies

ConocoPhillips, Exxon Mobil Corp. and Chevron Corp. each lost over 2 percent. Oil is expected to continue its downward slide which may lead to further loses to these and other oil related companies.

US Banks

Banks also declined on reports that Bank revenues will drop this quarter. JP Morgan, Goldman Sachs and Citigroup Inc. each lost over 2.5 Percent.

US Airlines

Airlines were one of the few positive sectors gaining 0.8 percent on the day. The Industry may generate a record $25billion next year if oil prices remain at current levels. Delta Airlines in particular appears attractively priced.

Asia

The MSCI Asia Pacific Index is down for a third straight day. All industry groups have retreated. The slide follows OPEC’s forecast for oil demand in 2015. Markets are tying the decline in oil demand to a slowing global economy.

Europe

European shares continued to fall for a fourth consecutive day, as plunging oil prices raised concerns that global economic growth is faltering. The focus will now turn on the result of the European Central Banks’ loan offer to banks this morning. The ECB is offering banks cheap four year loans as part of a package aimed at avoiding deflation. If the take-up turns out to be disappointing stock markets may react negatively.

Inditex

Inditex the company that owns Zara declared a rise in net profit in line with expectations. Inditex being a Spanish company, thus perceived as more risky than other retailers, may still be undervalued at this stage.

Withbread

Whitbread better known as the owner of Premier Inn Hotels and Costa Coffee said that it is in line to achieve its 2014 targets. The company continues to grow at a stable pace and may offer long term value to the patient investor.

Airbus

Airbus shares continue to slide following a 10% negative movement yesterday. The Airline announced a disappointing 2016 outlook. Their A330 and A380 continue to sell slowly despite recent updates.

Deutsche Bank, Barclays

The New York Bank Regulator is investigating Deutsche Bank and Barclays over misuse of trading software. It appears that algorithms or formulae used to assist trading were manipulated in favor of the banks. This news is the latest in a series that has seen several large investment banks accused of fraudulent behavior. The process is leading to these institutions having to downscale their business with the consequent negative effect on their share price.

Autos

The European Union gave in to demands by truck-makers to delays new regulation that includes safety and aerodynamic changes. The news should benefit Daimler, Volkswagen and Renault in particular.

Telecoms

France plans to award further network licenses in December 2015. The auction should raise over €2Billion for the government, but may increase competition for local operators.

Danone

The French Group is considering selling its medical nutrition business. The share price should react positively to is the deal goes though.

This article was issued by Mr. Antoine Briffa, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. 

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