Investors are dumping stock and commodities like a plague, sending the price of crude oil down by 20 percent. The price at the pump also will drop, barring an unlikely sharp market turnaround.
Crude oil was trading as low as $76 a barrel Tuesday morning and later rose to $80, more than $20 less than the price a month ago.
While prices at gasoline stations in United States and elsewhere can fluctuate daily, depending on the price of crude, Israel’s government-regulated system usually adjusts the price only at the beginning of each month.
If the price cuts hold, or turn around by only a small amount, motorists will enjoy an approximate 10 percent cut in the price at the pump. Israel’s regulatory agencies fix the maximum price according to various factors, with the price of crude accounting for about 50 percent of the final price of gasoline.
Commodity prices, except for gold and silver, are falling across the board, which may allow the Bank of Israel to breathe a lot easier due to an expected drop in the rate of inflation. There is even talk in Tel Aviv that Bank of Israel Governor Stanley Fischer may cut the interest rate a bit at the end of the month, an action that would further depreciate the value of the shekel.
The shekel’s strength before last week’s market crash has been a source of worry for exporters, who suffer a drop in income when their sales in dollars and Euros are converted at a rate that brings in fewer shekels for foreign currencies.
The Tel Aviv stock market is closed for Tisha B’Av, but volatility is in store for New York. While European markets dropped another 2-5 percent Tuesday morning, pre-opening indicators on New York swung wildly, with a range of 500 points.
Futures for the Dow Jones Industrial Average soared 300 points in the early morning and then dropped 200 points before climbing back to 140 points in positive terrtiory an hour before the opening of trade.
Comments by the Federal Reserve Board, following President Barack Obama’s promise Monday night to bring about quick reforms in taxes and expenditures, will keep traders glued to the news.
Israeli stocks traded in New York were hammered by as much as 10 percent Tuesday, with Teva Pharmaceuticals, Israel’s beloved blue-chip stock, dropping to barely above $36 a share, far below its all-time of $64 less than two years ago.
Panic sellers outnumbers bargain hunters in New on Monday, sending the Dow down by another 5.5 percent. If economic indicators this week show that the fears of a deep recession, or any recession at all, are exaggerated, traders will be in for several more volatile sessions.