According to Morgan Stanley analysts, the role of oil in stimulating hour-by-hour market moves is quite overstated, though its place in the broader macro debate is still actual. The matter is that energy companies aren’t the major equity in the market any longer. Analysts think both markets and oil are moving together. It’s because they’re powered by similar things: a lack of risk appetite, concerns over growth, not to mention a strong trade-weighted dollar.
American industrial production has just slipped for the last months. Some economists interpret this decrease as a sign of upcoming meltdown. Excluding the effect of oil, the sag in industrial production fades away faster than an East Texas jackrabbit.
Low oil prices have never been associated with the economic boon, as some people assume, though it’s crucial to recognize that many broad measured of today’s economic health, including American industrial production can be considerably affected by the decreasing oil price.
While earnings soar for the benchmark S&P 500 Index is expected to come in adverse year-over-year as well as earnings surge for the MSCI Europe has been stagnant for up to 48 months, the overall picture is clearly seen once energy is excluded. If we simply exclude this sector, we’ll discover year-on-year growth in Europe and America has reached five and four percent respectively.