Global stock markets dive in ‘perfect storm’ as oil slumps
May 24 2019 12:08 AM
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Pedestrians pass the London Stock Exchange Group offices in Paternoster Square. The FTSE 100 closed 1.4% down at 7,231.04 points yesterday.

AFP / London

World stock markets and oil prices slumped yesterday in a “perfect storm” as Europe headed to the polls amid fresh economic gloom, the China-US trade war raged on and beleaguered Prime Minister Theresa May delayed another key Brexit vote.
Europe kicked off voting across the continent in a contest in which rising populist forces are hoping to make significant gains, threatening closer EU integration.
Britain’s EU poll is an ironic twist for a country that decided almost three years ago to leave the bloc and whose leader had vowed to avoid the vote.
“The markets (are) caught in a perfect storm of UK political turmoil, US-China trade warmongering and European economic softness,” said Spreadex analyst Connor Campbell.
London’s FTSE 100 shares index was down 1.4% at 7,231.04 points at the close after the government postponed a crucial Brexit vote following an outcry from hardline Brexiteers over concessions made by May — who faces intense speculation over her future.
The pound forged another four-month low as May faces being ousted after a revised plan to push through her Brexit agreement, which sparked the resignation of cabinet member Andrea Leadsom.
Eurozone indices took a battering also yesterday, with Frankfurt and Paris losing around 1.8% at 11,952.41 points and 5,281.37 points respectively and as survey data showed the bloc’s economic growth remained “subdued” in May.
“The last thing the market needed yesterday was a reminder of the eurozone’s manufacturing and services sector woes,” added Campbell.
“For the region as a whole, the former fell even further into contraction territory.”
Frankfurt also tanked as the key Ifo survey signalled confidence among German business leaders struck its lowest level in more than four years in May.
The European single currency meanwhile touched a near one-month dollar low.
On Wall Street, the Dow index was down by around 350 points approaching midday in New York, having lost ground throughout the morning.
“US stocks are extending a recent slide in early action, courtesy of lingering trade concerns as the trade war between the US and China looks to be set for a prolonged fight, while global economic concerns remain following soft data out of Japan, the Eurozone and Germany,” Charles Schwab analysts said.
China-US trade frictions continue to dog investor sentiment, particularly in the tech sector after Washington blacklisted Chinese giant Huawei.
Traders ran for the hills, with no signs of a let-up in the tariffs stand-off between the world’s top two economies.
“Risk appetite has clearly been pushed lower by the multitude of events today,” Rabobank analyst Jane Foley told AFP.
“In particular, fear of a tech war or even a cold war between the US and China is now receiving greater attention.”
Tensions between China and the US have increased after Donald Trump banned telecoms giant Huawei from the US market and prevented American firms from selling to it.
The move has led a number of companies around the world to cut back their business with the firm, including Google, Japan’s Panasonic and EE in Britain, among others.
The row, which has seen the trade war widen to also become a battle over technology, has hammered the sector with major firms seeing their valuations tumble in recent weeks.
Back in Asia, Mumbai’s Sensex soared more than 2% to break 40,000 for the first time ever as traders welcomed polls indicating business-friendly Prime Minister Narendra Modi’s BJP was on course to win another majority.
Oil prices were sharply down in the late European afternoon — with WTI oil losing more than 5% and Brent 4.5% — as global economic worries took their toll, and overproduction worries resurfaced against the background of growing oil inventories.
“Crude ‘bears’ have been getting a helping hand from slowing demand growth due to the negative impact on the global economy of the Sino-US trade war,” said Oanda analyst Dean Popplewell.
By contrast, he said, “the crude ‘bull’ has been relying on escalating political tensions between the US and Iran, as well as ongoing supply cuts led by Opec.”



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