Option Investor
Market Updates

World uncertain about United States' response

Printer friendly version

Crude oil is on their rise today as investors and traders around the world are wondering what type of response (if any) will take place following recent terrorist attacks in the United States. Adding to the higher prices is that some workers are being evacuated from platforms in the Gulf of Mexico as a tropical storm heads toward Florida.

There have been reports that OPEC is prepared to ensure oil supplies will not be disrupted and may at some point be willing to increase production should it become necessary. Currently, Brent Crude futures for November delivery are bid $29.30 (+4%), after settling yesterday at $28.10. Contract high has been $29.82 and low of $28.45. December Brent futures are bid $28.70.

West Texas Intermediate (WTI) trades on the NYMEX and that exchange is not open for trading.

Transportation prices for oil as it relates to tanker prices have risen (transportation of crude from overseas) especially in regions near the Persian Gulf. Some reports indicate tanker prices have risen up to 20%.

Jeff Bailey

Overseas Trading

Traders in the UK lightened up on positions until it can be determined how America is going to react. The FTSE 100 was down 187.90 points, or 3.8 percent.

Banks, telecoms and drug stocks attracted the most selling, along with British Airways, which fell 17.7 percent. Vodafone, one of the FTSE-100's biggest components, accounted for 20 points of the FTSE's decline.

Food retailers posted modest gains, as well as defense stock BAE Systems and Smiths Group.

In Frankfurt, the DAX-30 fell 3.8% on the weakness of Deutsche Bank and Lufthansa.

The TSE 300 Composite was down 3.25% in Toronto. Volume was heavy, but selling was spread out over various stocks. Air Canada, Four Seasons Hotel, and reinsure firm Fairfax Financial did attract the most selling. Gold stocks were up 1.6%.

While today's action might be a window into Wall Street's reaction, little emphasis should be place on today's international trading. Most of the declines were traders taking a defensive position due to the uncertainty of financial and military responses in the U.S. The general consensus is that the Dow Jones Industrial Average could suffer a 250 point or 350 point decline but then stabilize. "I wouldn't be surprised if the markets behave well next week rather than coming back demoralized...It's more likely to be a case of united we stand," one dealer said.

Jeffrey Canavan
Assistant Analyst

Intraday Update Archives