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Oil prices and stock markets slide, dollar higher

Nov 10 2018 09:41

Global equities sank deeper into the red on Friday following dour economic news from China while a slump in oil prices deepened.

US investor appetite was dampened by economic data that suggested the central bank may continue raising interest rates, further eroding gains from a relief rally after Tuesday's midterm elections.

Higher US energy stockpiles drove benchmark WTI crude to its longest losing streak in more than 30 years, with the tenth straight lower finish, while the dollar gained against the pound and the euro.

In equities, Frankfurt was the lone standout posting gains, while London, New York, Paris, Tokyo and Shanghai all crumbled, but New York indices were still higher for the week.

Hong Kong lost 2.4% on the day.

Chinese wholesale inflation numbers released Friday came in weaker than expected, possibly pointing to slackening demand, while auto sales were also lower.

Gregori Volokhine of Meeschaert Financial Services told AFP there were "clear signs" of slowing in the Chinese economy, amid the tariff battle between Washington and Beijing.

"But, while a trade war can be resolved through negotiation, an economic slowdown is a much more serious problem," he said.

"Slowing growth in China represents a risk for everyone."

Meanwhile, US wholesale inflation, also released Friday, was hotter than forecasts, diminishing chances the Federal Reserve will slow the pace of interest rate increases.

Oil majors tank

David Madden, analyst at CMC Markets, told AFP that "rising US stockpiles, rising US production - which is now at a record-high - and talk of Iraq and Indonesia raising output next year are all factors as to why oil is lower. Ongoing concerns about China slowing down is a factor too."

Madden added that the "price needs to strike a balance, of being cheap enough to keep demand strong, and keep (US President Donald) Trump happy, but not so low that their oil revenue drops drastically."

Capital Economics meanwhile warned that as the global economy slows into 2019 the US market would take a buffeting.

"We think that the global economy will slow next year," said the consultancy, which forecast the US stock market "will fall by nearly 15% in 2019."

Shares in European energy companies tanked as oil slid back. BP shed 2.0%, Shell gave up 1.0% and Total lost 2.5%. But US firms Exxon Mobil and Chevron were little changed.

Stock markets had enjoyed a midweek rally after traders bet that expected gridlock on Capitol Hill would prevent Congress from enacting policies that could encroach on Trump's business-friendly agenda.

But markets began to sag again on Thursday after the Fed said it expected further "gradual" interest rate increases.

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equities  |  dollar  |  markets  |  oil
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