The Dow Jones Industrial Average struggled to rebound after it lost over 600 points on Monday as Brent crude oil prices fell below $70 per barrel, while U.S. West Texas Intermediate crude fell below the $60 mark.
The drop in oil prices come as U.S. President Donald Trump was hoping that the Organization of Petroleum Exporting Countries would pare down production–a sentiment shared by Saudi Arabia Energy Minister Khalid al-Falih, who said production would need to be cut in 2019 by a million barrels per day.
“The recent downward revision to the global economic growth forecast and associated uncertainties confirms the emerging pressure on oil demand observed in recent months,” OPEC said.
The markets struggled in yesterday’s session as lingering trade worries crept into the markets with reports that U.S. President Donald Trump is threatening to install more tariffs, particularly on vehicles manufactured overseas. Tuesday’s reports that Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He resuming talks didn’t help the markets get in the green.
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President Trump and Chinese President Xi Jinping will be face to face at the G20 summit on November 30 at Buenos Aires in Argentina. Haibin Zhu of J.P. Morgan said there was a 55% chance that the two leaders of the largest global economies would come to a tangible agreement to settle their trade wars.
“We remain cautious, as the challenge to address US-China conflict remains high,” said Zhu. “The US-China conflict extends beyond trade to areas such as technology, intellectual property rights, market access, industry policy, and ultimately centers on the competition between the two economic superpowers.”
“It is not clear whether China is willing to make visible changes beyond trade (like on emarket access, IP protection, technology), and whether the US will prioritize its demand list,” Zhu added.
The S&P 500 and Nasdaq Composite were up a few points and 35 points, respectively, as of 11:00 a.m. ET. Apple bounced back by 0.57% after declining yesterday on Lumentum Holdings, the technology company responsible for the iPhone’s face-recognition capability, reducing its outlook for fiscal second quarter 2019.
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