Oil prices are plummeting: What does this mean for the stock market?

Oil prices are plummeting: What does this mean for the stock market?

According to a report from www.stockstreet.de, Russia and Saudi Arabia have called on OPEC members to implement recommended production cuts as oil prices plummet. North Sea Brent fell below $74, just 2.55% from its summer lows. From the perspective of the Elliott Wave theory, the downward trend could come to an end, which could also have fundamental and technical reasons.

One possible effect of a rising oil price on the market is that falling oil prices have fueled hopes of further declines in inflation and thus falling key interest rates from central banks. This may have led to a collapse in bond market yields and rising stock prices. However, a further rise in oil prices could end easing inflation worries and falling bond market yields.

Today's US labor market data does not indicate that the US Federal Reserve will be able to cut interest rates as early as the first quarter of 2023, as the US unemployment rate has surprisingly fallen. This led to a rise in yields and a small dip in stock prices. However, the prices were quickly made up again afterwards.

Survey results from the University of Michigan show that consumer sentiment has improved and inflation expectations have fallen significantly. This has encouraged investors in the stock market, but could be heavily influenced by the decline in oil prices.

So it remains to be seen whether there will be an end to the price decline and a turnaround in oil prices, which could potentially end the party on the stock market.

As a financial expert, I recommend closely monitoring developments on the stock and oil markets and assessing the upside potential in the stock market and the downside potential in returns in the short term. So enjoy the stock market “party” while it lasts.