Despite a stimulus plan of historic scale, the announcement of China’s $600 billion program, though sufficient to fuel major rallies on equity markets in Asia and, to a lesser degree, Europe early, has been eclipsed by a continuing stream of bad bad news from the US. And the article doesn’t even mention Circuit City’s filing for bankruptcy. From Reuters:
Oil falls, recession concerns outweigh China plan
Mon Nov 10, 2008 1:46pm EST
By Edward McAllister
NEW YORK (Reuters) – Oil prices fell on Monday as concerns about the mounting global financial crisis offset Saudi Arabia’s move to cut supplies and China’s launch of a $600 billion economic stimulus plan.
U.S. stocks cut gains as General Motors shares slumped, Fannie Mae recorded a record $29 billion loss and the United States pledged further support for struggling insurer AIG.
U.S. crude fell 91 cents to $60.13 a barrel by 12:41 p.m. EST, after rising as high as $65.56 on news of China’s stimulus plan. London Brent crude was down 63 cents at $56.72.
“The crude futures rally didn’t last even half a day today because the oil markets are vulnerable to the steady drumbeat of bad economic data,” said Gene Mcgillian, an analyst at Tradition Energy in Stamford, Connecticut.
“Bad news from Fannie Mae, AIG and earlier GM all point to demand destruction,” he added.
The U.S. government restructured its bailout of American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.
China’s spending package aims to boost domestic demand and help the world’s forth largest economy ride out the credit crisis, but analysts said it would take time to filter through to the energy markets.
“If you step back, you realize China’s stimulus could take months, or even years, to affect energy markets,” said Phil Flynn, an analyst at Alaron Trading.
“After the initial boost to the market, the excitement is wearing off. It’s an admission that China’s economy is slowing.”
Saudi Arabia told refiners in Asia it would cut December supplies by 5 percent, signaling its adherence to an OPEC plan to cut output.
Oil prices fell nearly 10 percent last week and dipped below $60 the previous week to their lowest level since March 2007, after a string of dismal economic reports from the United States sharpened fears of a protracted recession.
(Additional reporting by Gene Ramos and Robert Gibbons in New York, Fayen Wong in Perth and Barbara Lewis and Alex Lawler in London; Editing by Walter Bagley)