AFP
Global stock markets slumped yesterday as oil prices struck fresh five-year lows, China clamped down on speculative trading and Greece sparked renewed worries about the eurozone.
“Misery loves company; never has this been truer than on the markets today (Tuesday),” said Connor Campbell at Spreadex traders. “Another round of poor economic data, more volatility from the permanently volatile Greece and oil’s continued descent into the abyss has seen a dismal day...”
Cheap oil will hurt oil exporters dependant on crude revenues, and the stock markets of the energy-rich Gulf states took a beating.
European indices fell sharply, where added to the mix were concerns about a fresh crisis in Greece that could renew worries about the struggling eurozone.
London’s benchmark FTSE 100 fell 2.14% to 6,529.47 points, in Paris the CAC 40 sank 2.55% to 4,263.94, while in Frankfurt the
DAX 30 shed 2.21% to 9.793,71 points.
Milan tumbled 2.8% and Madrid lost 3.1%.
“Political uncertainty in Greece acted as one of the main drivers for the sell-off in Europe after the Greek government brought forward the presidential election to next week,” said Kamal.
Greek stocks plunged 12.8%—the largest one-day drop in 27 years—after the government unexpectedly brought forward a high-stakes presidential vote.
The move raised questions over the recovery plan for the country which nearly caused the breakup of the eurozone.
Demand for safe-haven assets such as German 10-year bonds spiked, sending the yield to a new record low of 0.685%. French 10-year bonds touched a new record low of 0.954%.
In European equities trading, Tesco shares were the biggest loser in London, sinking 6.6% to close at 174.90 pence after it sharply reduced its profit forecast.
The world’s third biggest supermarket group said its trading profit “will not exceed £1.4bn” ($2.2bn, €1.8bn) in its financial year to February 2015. Analysts’ consensus had been for £1.94bn as Tesco undergoes changes to its business triggered by a fraud probe.
“Tesco is no longer a viable investment,” said Marc Kimsey, senior trader at Accendo Markets.
Wall Street was also pulled lower, with the Dow Jones Industrial Average falling 0.93% to 17,686.63 points.
The broad-based S&P 500 shed 0.82% to 2,043.40 points and the tech-rich Nasdaq Composite Index slid 0.60% to 4,712.46 points.
In foreign currency markets, the euro rallied against the dollar yesterday, a day after the European single currency hit a two-year low against the US currency.
One euro bought $1.2412 in late European trading, compared to $1.2308 on Monday.
Gold, another safe-haven asset, also benefited from increased risk aversion among investors.
On the London Bullion Market, gold finished at $1,227 an ounce, having risen as far as $1,238.34 during the session, up sharply from $1,193 on Monday.