From currency markets to stocks, the oil prices are inextricably tied to the various markets. The question is: how far will the plummeting prices go, and will they sink the market ship with them, or is there a glimmer of hope in this 12-year record low? According to the experts, there is.
If traders are listening to the word of Pierre Andurand (as they should be, since he is the one who predicted and profited from the oil price decline twice already), market prices have reached their lowest and will soon be heading back towards $50 throughout 2016 (more than double what it stands at today). 2017 should see an even bigger increase, topping out at $70 a barrel during the year.
What does all this have to do with the stock market? Well, if history is any indication (and it always is in terms of economic trends), the market is bound by the oil prices. Therefore, market trends will follow the same patterns as the oil pricing trends. If oil prices have bottomed out, then the stock prices are likely to see an upward trend in the coming months as well. This is good news for investors and traders
Not everyone is completely on board with the oil correlation. Larry Fink, CEO of BlackRock, was quoted as saying that he believes equities to be more influential than oil, and that the oil industry still has some ways to go before hitting rock bottom.
Despite the majority of opinions being optimistic, investors are cautious as major financial institutions meet to review the financial markets and policies for 2016. The US Fed in all likelihood will cut back on previously predicted and enacted rate hikes, while the European Central Bank and the Bank of England have both refrained from mentioning any rate hikes in the near future.