Oil prices, stock markets slide; dollar higher

Ben PERRY
A broadly positive week for stock markets

Oil prices and stock markets slumped Friday, with Brent North Sea crude tumbling under $70, while the dollar strengthened as the Federal Reserve indicated more "gradual" interest rate increases.

The Brent benchmark struck a seven-month low on surging US energy stockpiles before a weekend meeting of major oil producing nations.

Wall Street joined European and Asian stock markets in losing ground as a rally triggered by unsurprising US midterm election results faded away.

"A more hawkish than expected Fed quickly extinguished the midterm election rally before it had time to take off," commented Fiona Cincotta, senior market analyst at City Index.

"Trade war fears and higher interest rates, that weighed on sentiment and pulled the markets lower in October, have returned to haunt investors," she added.

More than two hours into trade the Dow Jones index had lost 0.9 percent while at the close in London and Paris the benchmark FTSE 100 index and the Cac-40 had given up 0.5 percent, as markets wait for signs of an eventual Brexit deal to smooth Britain's bumpy exit from the European Union.

Frankfurt's DAX 30 index performed only slightly better to end the session barely in positive territory amid worries over Italy's troubled economy while Asian equities also endured losses.

Tokyo ended down 1.1 percent, Hong Kong shed 2.4 percent and Shanghai finished 1.4 percent lower, after data showed another drop in Chinese factory prices, while tech firms were hit by a series of weak earnings results from mainland firms.

- Oil majors tank -

Benchmark oil contract, Brent North Sea crude for delivery in January, slumped to $69.13 per barrel, the lowest level since April. A small recovery still left it hovering three quarters of a dollar off on the day.

New York's West Texas Intermediate (WTI) for December tanked to a February low of $59.26 per barrel before creeping briefly back over $60.

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, adding that "we forecast that the US stock market will fall by nearly 15 percent in 2019."

Shares in European energy companies tanked as oil slid back.

BP shed 2.0 percent, Shell gave up 1.0 percent and Total lost 2.5 percent.

Stock markets had enjoyed a midweek rally after traders bet that the expected gridlock on Capitol Hill would keep US President Donald Trump from pushing through measures that would likely stoke inflation and in turn see a hike in rates.

Rising US borrowing costs have been one of the major issues weighing on global equities this year.

However after its latest policy meeting Thursday, the Fed repeated that it expected "further gradual increases" in the key interest rate as the US economy strengthens.

- Key figures around 1700 GMT -

Oil - Brent Crude: DOWN 75 cents at $69.90 per barrel

Oil - West Texas Intermediate: DOWN 63 cents at $59.91

New York - Dow: DOWN 0.9 percent at 25,962.06

London - FTSE 100: DOWN 0.5 percent at 7,105.34 points (close)

Frankfurt - DAX 30: UP 0.1 percent at 11,529.16 (close)

Paris - CAC 40: DOWN 0.5 percent at 5,106.75 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,229.44

Tokyo - Nikkei 225: DOWN 1.1 percent at 22,250.25 (close)

Hong Kong - Hang Seng: DOWN 2.4 percent at 25,601.92 (close)

Shanghai - Composite: DOWN 1.4 percent at 2,598.87 (close)

Euro/dollar: DOWN at $1.1351 from $1.1364 at 2200 GMT

Pound/dollar: DOWN at $1.2980 from $1.3063

Dollar/yen: DOWN at 113.76 yen from 114.07 yen

burs-cw/dcr