Saturday 21 October 2017

Oil glut worries hit global stocks

Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt
Traders work in front of the German share price index, DAX board, at the stock exchange in Frankfurt

Chuck Mikolajczak

World stock markets declined yesterday, as a sharp drop in oil prices weighed on the energy sector, while hawkish comments from US Federal Reserve officials pushed the US dollar to a one-month high.

Oil prices fell nearly 3pc to seven-month lows after supply hikes by several key producers overshadowed compliance by Opec and non-Opec oil producers on a deal to cut global output.

That slide weighed down energy stocks on Wall Street and in Europe.

The S&P energy index dropped 1.3pc as the worst performing of the 11 major S&P sectors and European oil and gas slumped 2.2pc.

"Obviously you go back to the first part of 2016 when oil made a deep dip it dragged a lot of other things with it," said Stephen Massocca, of Wedbush Securities in San Francisco.

"We are starting to get into that area where people are thinking some of the shale exploration is going to go down. That explains weakness in energy stocks."

US crude fell 2.31pc to $43.18 per barrel and Brent was last at $45.93, down 2.09pc.

The Dow Jones Industrial Average fell 19.22 points, or 0.09pc, to 21,509.77, the S&P 500 lost 9.79 points, or 0.40pc, to 2,443.67 and the Nasdaq Composite dropped 24.16 points to 6,214.86.

The Dow and benchmark S&P 500 had hit fresh records on Monday, buoyed by tech stocks.

The pan-European FTSEurofirst 300 index lost 0.66pc and MSCI's gauge of stocks across the globe shed 0.54pc. In Dublin the Iseq index closed up 0.45pc at 7,095.31.

The US dollar strengthened for a second day, hitting a one-month high of 97.871 against a basket of major currencies as Federal Reserve maintained a hawkish tone on interest rates. (Reuters)

Irish Independent

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