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Gains Forecast for Pound Sterling (GBP) vs NOK & CAD on Oil Price Slump

January 15, 2016 - Written by Tim Boyer

Global Stock Markets Continued to Struggle Today



Global stock markets have once again suffered pronounced downside today, with London’s benchmark FTSE 100 index shedding over 2.0% of its value on the day.

America’s exchanges opened up sharply lower when US trading recommenced during the middle part of this afternoon and the losses have stuck, with the tech-heavy Nasdaq down by over 3.0% at the time of writing and Wall Street’s headline index, the Dow Jones, dropping by well over 2.0%.

Risk Sentiment Dampened by Sustained Losses for Chinese Equities



The shift out of risk from investors was triggered by further sustained losses for Chinese equities during the overnight Asian trading session.

The Shanghai Stock Exchange Composite Index fell by 3.55% to close at its lowest level for over two years and the move lower for Chinese stocks since Christmas now stands at over 20%, (the measure used by analysts to define a ‘bear market’).

The renewed downside shift for Chinese equities provides firm evidence that the sustained efforts from China’s government to stabilise local share markets during recent months have proved futile and equities traders across the world have been spooked by the widespread sell-off in China.

Crude Prices Dropped Below $30 a Barrel Today with Futures Expected to Decline Further



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The fresh fears that all is not well with China’s economy, which represents the second largest market for Western nation’s exports, had the additional effect of sending global commodity prices downward to fresh multi-year lows.

The price of a barrel of Brent Crude Oil has settled in the $29s for the first time since 2003 today and analysts forecast that there could be further losses to follow for oil.

Cenkos Natural Resources issued a note earlier stating that, ‘with no apparent signs of strengthening demand, and only further indicators of future global supply growth, the outlook for oil prices is leading most market watchers to ratchet down estimates for oil prices in 2016 and 2017.’

Meanwhile, on the currency markets, the Pound Sterling has recorded gains against the oil-driven Norwegian Krone (currency : NOK) and the Canadian Dollar (currency : CAD). The forward moves for GBP NOK and GBP CAD could accelerate if the losses for oil continue into next week.

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