Crude oil extends steep dive, stocks fall on growth fears

Oil prices extended a high slide on Wednesday over the back of worries about weakening world demand and oversupply, while global shares sagged as energy sector strains heightened concern with a sluggish down inside global economy.

Spreadbetters expected European stocks to spread out lower, with Britain’s FTSE losing 0.4%, Germany’s DAX slipping 0.3% and France’s CAC shedding 0.5%.

US West Texas Intermediate (WTI) crude futures dived 7% the previous day, suffering their biggest one-day decrease a lot more than a couple of years. The contracts last stood at $55.30 per barrel for just a lack of 0.7%, following a descent to your one-year low of $54.75 overnight.

Brent crude was down 0.35% at $65.24 per barrel after tanking 6.8% along with an eight-month trough of $64.61.

Brent had soared to your four-year a lot of $86.74 in the October because market braced for folks sanctions on Iran, but prices have sunk roughly 25% subsequently.

Concerns about global growth pushed MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.5%.

Hong Kong’s Hang Seng dropped 0.55%? plus the Shanghai Composite Index retreated 0.9%.

Australian stocks fell 1.75%, South Korea’s KOSPI lost 0.3% and Japan’s Nikkei rose 0.16%.

The Dow and S&P 500 ended slightly lower on Tuesday as lower oil prices took a toll on energy shares, offsetting a compact grow in technology stocks and renewed wants progress in US-China trade talks.

“As the plunge in WTI canno doubt serve as a relief for?emerging?markets plus the global consumer, US real rates keep increasing, underwriting the dollar’s strength,” wrote Sean Darby, chief global equity strategist at Jefferies.

“The competition for capital is coinciding using a sharp slowdown in China and?emerging?markets, putting pressure on 2019 earnings.”

Riskier assets have fallen under strong selling pressure over the last sixty days as worries in regards to peak in earnings growth included to international trade tensions and indications of slowing in global investment and growth.

The oil plunge underlined cracks during the global economy. In Japan, data confirmed the world’s third-largest economy contracted inside third quarter, leading to growing indication of weakness globally, with China and Europe losing momentum. Germany is expected to report later from the day what has economy also shrank last quarter.

“The markets could have reacted more positively to US-China trade and Brexit-related headlines ever before,” said Makoto Noji, chief currency and foreign bond strategist at SMBC Nikko Securities in Tokyo.

“But currently there exists more concentration on the chance of both US and Chinese leaders maintaining their tough stance, using a compromise eluding them, and Brexit bogging down. Market sentiment is clearly cooling down.”

The United Kingdom and European Union agreed upon the link for any Brexit divorce deal . Pm Theresa May will present the draft withdrawal agreement to her senior ministers on Wednesday for discussion and after that choose the other steps.

Lifted by the latest desires for a Brexit deal, the pound extended overnight gains and was last 0.1% higher at $1.29.

Brexit hopes also supported the euro. Considering currency was up 0.05% at $1.1292, pulling back from your 17-month trough of $1.12 brushed on Monday.

The euro’s gains, however, were tempered by concerns over Italy’s budget proposals. The ecu Commission rejected Italy’s plan last month and has now threatened to impose penalties when not revised to adapt with EU regulations – something Rome has indicated it’s not wanting to do.

The dollar index, which measures the greenback’s strength against six major currencies, lost 0.15% to 97.138.

The index had steadily climbed to the 16-month peak of 97.693 on Monday amid the ongoing US-China trade dispute and the Federal Reserve’s commitment to keep gradually raising loan rates.

The Organization with the Petroleum Exporting Countries (OPEC) warned that any supply glut could emerge in 2019 since the world economy slows and rivals increase production more rapidly than expected.

OPEC member states rely upon high oil prices to finance government budgets and they’ve got been watching the rise in supply and the corresponding price slump with concern.

Led by top exporter Saudi Arabia, OPEC is making increasingly frequent public statements which it would start withholding crude in 2019 to tighten supply and prop up prices.

“OPEC and Russia are under pressure to relieve current production levels, this is a decision that people expect you’ll utilized on the next OPEC meeting on December 6,” said Jon Andersson, head of commodities at Vontobel Asset Management.

Such a stance, however, is mainly responsible for friction with US President Mr . trump, who supports low oil prices and contains called on OPEC not to ever cut production.