Global
oil glut sends US stock markets plummeting
Dow
finishes down over 200 points and global markets dip after crude oil
prices fall on news that Iraq will inject record oil production into
oversupplied market
Guardian
staff and agencies
Monday
25 January 2016 21.43 GMT
US stock markets
fell once more Monday as a renewed slump in oil prices, anxiety over
global economic growth and central bank policies all but wiped out
last week’s brief recovery.
The Dow Jones
Industrial Average lost more than 200 points, or 1.3%, and the S&P
500 and tech-heavy Nasdaq both fell over 1.5%. European markets had
already finished the day down: in London the FTSE 100 closed down
23.01 points, or 0.39%, Germany’s DAX dropped 0.29% and France’s
Cac fell 0.58%.
The declines
followed a two-day rally on Wall Street late last week and came as
crude oil prices fell as much as 5% following an announcement from
Iraq about record-high oil production that will feed into an already
oversupplied market, wiping out much of the oil price gains from of
the biggest-ever daily rallies on Friday.
“Right now, you
could track the direction of stocks when you see where oil is
trading,” said Brian Jacobsen, chief portfolio strategist at Wells
Fargo Funds Management in Menomonee Falls, Wisconsin.
The oil-led market
turbulence since the start of 2016 has raised hopes of more stimulus
from major global central banks.
Last week, European
Central Bank chief Mario Draghi signalled the bank was open to more
monetary stimulus to combat weak growth and inflation in the euro
zone.
Traders have bet the
Federal Reserve would seek to soothe financial markets after its
two-day meeting on US monetary policy that will begin on Tuesday.
Global markets
slumped at the start of the year on fears that a slowdown in world
second largest economy China would spread to the rest of the world,
and oil prices sank to 13-year lows.
German business
confidence deteriorated to an 11-month low in January, a survey
showed, suggesting growing concern among company executives in
Europe’s largest economy.
“If the Fed puts
too much emphasis on global developments, that could really harm
sentiment,” Jacobsen said.
US interest rate
futures implied traders placed a 13% chance the Fed will hike rates
later this week.
The pan-European
FTSEurofirst 300 index finished down 0.4%, while Tokyo’s Nikkei
ended 0.9% higher.
The MSCI all-country
World Equity Index fell 0.4% to 366.48.
Losses in oil and
Wall Street pushed the greenback lower. The dollar index, which
tracks the dollar against a basket of six currencies, slipped 0.2%,
to 99.363.
The yen edged up
0.25% against the dollar at 118.46 yen, and was steady against the
euro at 128.40 yen.
Brent crude oil
futures were down 5.2% to $30.50 a barrel, while US crude dropped
5.8% to $30.34.
Iraq’s oil
ministry told Reuters on Monday that oil output reached a record high
in December, putting oil prices under renewed pressure.
US 10-year Treasury
yields were down 3 basis points at 2.02%, and 10-year German Bund
yield was down 1 basis point at 0.397%, as the fall in oil prices
underpinned support for safe-haven debt.
Spot gold rose 0.7%
to $1,105.40 an ounce.
Associated Press
contributed to this article.
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