Mainstream market commentary suggestions that declining oil prices are exerting downward pressure on global stocks are highly flawed says Japan-based investment brokerage, Core Strategic Partners.

Sharp falls on US and European markets have been largely attributed to the ongoing rout in oil prices with many presuming that oil below $40 owes more to a decline in global demand than it does to the ongoing glut caused by OPEC’s refusal to limit production.

“The jitters in the market have little to do with oil prices. Of course, they should affect the value of energy stocks like ExxonMobil and Royal Dutch Shell but transports and airlines benefit from low oil prices; why are their stocks dropping too,” asked Will Masson, chief market strategist at Core Strategic Partners.

Masson thinks the real culprit is uncertainty over the future trajectory of US interest rates. “The December hike – which we suspect may not come – is largely baked into prices now. Investors are worried about how quickly subsequent hikes will come and, frankly, given the huge part that cheap credit has played in the fantastic run up we’ve seen in US stocks, we don’t blame them. If credit becomes more expensive, there’s less cheap money to prop up these valuations,” he added.

Core Strategic Partners says much of the short-term price action in markets will depend on the statement that accompanies the Federal Reserve’s interest rate decision later this week. A dovish statement, it believes, will see risk assets recover some ground but a hawkish statement could see values fall further.

About Core Strategic Partners:
Core Strategic Partners' investment prowess is based on establishing a truly holistic understanding of our client's financial situation, objectives and risk profile. Through our delivery of independent, fee-based services and our philosophy of working closely with individuals, families and their professional representatives, we have established ourselves as a highly-trusted adviser to thousands of clients around the world.