GTC Trendline – December 2014
The world’s afloat on oil
The key feature of the last quarter of 2014 was unquestionably the somewhat unexpected and rapid decline in the oil price which dropped by a mammoth forty odd percent. This created increasing volatility in global markets which was further exacerbated by a decision to maintain interest rates at all-time lows. This increased volatility was evidenced by wild fluctuations in the S&P 500 which declined almost 5% mid-December to rebound strongly at month end to close just below record highs. This sudden rebound was occasioned by a statement from the Federal Reserve Open Market Committee (FOMC) that they would be “patient” with regard to the normalisation of monetary policy.
Quo vadis Eskom?
Local market sentiment has been dominated by a variety of factors but in particular has been influenced by the somewhat unexpected collapse in the oil price, the Eskom crisis and a continued slowdown in the Chinese economy. Crude oil’s fall of some 45% in 2014 has resulted in a rampant U.S. dollar and a concomitant decline in the value of ,in particular, emerging market currencies and hence a considerably weaker Rand.
