Fresh rout resumes on world stock markets
AFP
AFP, LONDON: Another fierce global selloff gripped Asia and Europe yesterday as investors seized on tumbling oil prices and intensifying concerns over the darkening world outlook.
Heavy Wall Street losses on Wednesday cut short a two-day rally and smothered hopes of a sustained turnaround on battered global markets.
Oil collapsed this week to 12-year lows below $30 a barrel, wracked by oversupply and demand fears linked to Chinas economic slowdown, sending shockwaves across trading floors.
The rout across global stock markets resumed again today as investors remain on edge, said analyst Manoj Ladwa at brokerage TJM Partners. A continued weakness in the price of oil and mounting growth concerns are all weighing heavy on equity prices, he told AFP.
Paris stocks nosedived 3.1 per cent, hit also by a 20-per cent drop in Renaults share price after unions reported anti-fraud raids at the French carmaker.
Frankfurt tumbled 2.9 per cent as investors digested news that the eurozones largest economy grew by about 0.25 per cent in the fourth quarter, after expansion of 0.3 per cent in the previous three months.London equities shed 2 per cent before an interest rate decision from the Bank of England, which is forecast to keep British borrowing costs at a record-low 0.50 per cent. Elsewhere, Madrid dropped 2.2 per cent and Milan dipped 2.0 per cent.
This appears just to be an extension of the sell-off in the US and Asia overnight and reflects the fragile and uncertain nature of the markets at the moment, said Oanda analyst Craig Erlam.
He added that investors appeared to be very nervous but sounded a note of caution. I do not think its as bad as this at this stage and while it may result in a healthy and natural correction in the markets, I dont anticipate the kind of carnage that some foresee.
However, most Asian markets sank Thursday, tracking Wall Street, as hopes evaporated of a recovery from the recent stocks bloodbath for the region.
Tokyo plunged almost four per cent in the first hour and Shanghai fell below its lowest levels of the summer rout.
The broad-based sell-off in Asia came after Wall Streets three main indexes saw big losses, with energy firms taking a hammering again as oil prices hit lows not seen since the first half of 2004.
Adding to the gloom, the Federal Reserves Beige Book survey of regional economic conditions stoked jitters over the world economy.
Japans Nikkei dived 2.7 per cent, Sydney shed 1.6 per cent and Hong Kong lost 0.6 per cent, while Shanghai ended 2.0 per cent higher on bargain hunting.
Oil firms after slump
News of rising US stockpiles sent Brent oil prices tumbling underneath $30 per barrel on Wednesday for the first time since 2004. New York crude had already breached the key psychological barrier on Tuesday.
However, the oil market crept back towards $31 in morning deals on Thursday.
Last nights sell-off on Wall Street, and concerns as to just how far oil prices will slide, continue to rattle investor confidence on a global scale, added TrustNet analyst Tony Cross.
Lower oil prices weigh heavily on the energy sector because they eat into profits and revenues. Sentiment was also hit by news that suicide attackers struck the Indonesian capital Jakarta on Thursday, killing at least seven people.
The blasts came after Istanbul was rocked by a deadly suicide bombing carried out by an Islamic State (IS) jihadist that killed 10 German tourists.
Growing evidence of a slowdown in China remains at the forefront of market worries, according to Erlam.
Oil prices, terror attacks and heightened geopolitical risk are additional factors weighing on sentiment right nowbut I think the main concern is around China and emerging markets and the threat they pose to the global economy, he told AFP.
