Oil experienced a very turbulent start to 2016 and remains victim to a ceaseless theme of an aggressive oversupply in the markets, while rising concerns around slowing global growth have renewed fears that demand may be warning. The UK equity market finished in the red as oil prices dipped below $30 per barrel and investors weighed a batch of mixed economic data.
Oil prices reversed gains from Thursday as concern grows that Iran could restart oil exports flooding the market in an already oversupplied market.
Elsewhere, China entered a bear market as the Shanghai Composite Index closed down 3.5%, falling more than 20% from its December high, amid concerns about the volatility in the yuan. A bear market is when the price of an asset drops 20% from its peak.
Interventions by Chinese authorities are beginning to wane and lack effect as the cycle of capital outflows, weaker yuan and general volatility undermines investor confidence globally.
UK construction output unexpectedly dropped in November from the previous month, according to figures released by the Office for National Statistics. Output fell 0.5%, its biggest decline since May 2013 and well short of economists’ expectations for a 0.5% increase.
US industrial production fell for the third straight month in December, according to data released by the Federal Reserve.
US industrial output dropped a seasonally-adjusted 0.4% last month, steeper than the 0.2% slip economists had been expecting. Manufacturing output, which makes up nearly three quarters of overall industrial output, fell 0.1% in December, worse than the zero growth predicted.
Consumer sentiment in the US rose a little more than expected this month, according to preliminary figures released by the University of Michigan. The index of consumer sentiment rose to 93.3 in January from 92.6 in December and compared with economists’ expectations for a reading of 93.
Meanwhile, Federal Reserve policymaker William Dudley said the economic outlook had not changed since the central bank’s last policy meeting and that interest rates will continue to gradually rise.