The Business Times

Stock prices likely to stay low in next two weeks

It may track the price of energy for the rest of the year; hedge fund manager says weakness in energy, commodity prices could cause deep correction in "risk" assets next year

Published Sun, Dec 20, 2015 · 09:50 PM

THE US stock market followed oil prices lower last week - and it looks likely to track the price of energy for the rest of the year.

An initial sanguine response to the Federal Reserve policy change has given way to fear about the effects of higher interest rates on oil and other risky areas of the markets.

Whenever the Fed begins a new rate-hiking cycle, the effect is similar to that of the tide going out on a busy harbour. The underside of the boats close to the dock are suddenly sitting on dry land, revealing the patches, rot and holes in their hulls. In this case, those boats belong to money managers who made big gambles on commodities, junk bonds and biotech stocks.

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