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Global stock markets fall amid oil rout

21 January, 2016 07:05
Global stock markets fall amid oil rout

Unseasonably warm weather and rising supply will keep the crude oil market oversupplied until at least late 2016, the International Energy Agency said in its monthly report on Tuesday.

 

 

Europe's main markets closed sharply down, led by the FTSE 100, which sank 3.46%, or 203.2 points, to 5,673.58.In afternoon trading on Wall Street, the Dow Jones, S&P 500, and Nasdaq indexes were close to 3% down.Many markets are now in so-called bear market territory - a fall of 20% or more from their most recent peak.Germany's Dax and the Cac 40 in Paris ended 2.82% and 3.45% down respectively.

 

The falls in Europe and the US came after Asian stocks closed sharply lower.Markets in Dubai closed at a 28-month low, while in Japan shares fell to their lowest level since October 2014.Top emerging market shares and currencies were also caught up in the turmoil, with the Russian rouble hitting a new record low of 80.295 against the dollar.

 

Analysis: Andrew Walker, economics correspondent:

Some observers think that many markets were riding for a fall. Asset prices were pumped up by ultra-low interest rates in the developed world and also by the central banks that have engaged in quantitative easing, buying financial assets with newly created money.

 

That happened with shares, with bonds and with commodities. For commodities the boom is well and truly over, partly due to the slowdown in China and in the case of oil mainly due to plentiful supplies.

 

Clearly there are some troublesome developments and the IMF has a warning: "If these key challenges are not successfully managed, global growth could be derailed."That at bottom is what the markets are worried about."Investors have decided the world is a riskier place," said Laura Lambie, senior investment director at Investec Wealth Investment.

 

She says that concerns over growth in China, the prospect of rising US interest rates and the possibility that low oil prices might force some oil companies out of business are the main concerns for investors.

 

"There's been a short-term change in sentiment," she said.

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