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Global stocks weighed down by another oil price dive Global stocks having another lackluster day on economy fears
(about 5 hours later)
TOKYO — Global shares stumbled Wednesday after another steep drop in the price of oil reinforced worries about the potential impact on the world economy of job cuts and reduced investment in the energy industry. LONDON — Global stock markets were having another lackluster day Wednesday amid ongoing worries over the state of the world economy, which has piled the pressure on oil prices in particular.
KEEPING SCORE: France’s CAC 40 inched down 0.2 percent to 4,276.23 and Germany’s DAX was down 0.7 percent at 9,513.72 in early trading. Britain’s FTSE 100 slipped 0.4 percent to 5,899.64. But U.S. shares were set to recover some of the previous day’s losses. Dow futures were up 0.3 percent at 16,146. S&P 500 futures rose 0.4 percent to 1,904.50. KEEPING SCORE: In Europe, France’s CAC 40 was down 0.5 percent to 4,261 while Germany’s DAX fell 1.2 percent to 9,470. The FTSE 100 index of leading British shares was 0.6 percent lower at 5,867. U.S. stocks were poised for modest gains at the open, with Dow futures and the broader S&P 500 futures up 0.2 percent.
ECONOMY WORRIES: Investors are worried about spillover effects from the slump in oil prices as major energy companies cut jobs and investment. Falling oil prices are also an added challenge for economies that are battling deflation at a time when both China and the U.S. are showing signs of faltering growth momentum. However, some analysts think there will be eventually be an economic boost from lower energy costs as the disposable income of consumers could be increased by several trillion dollars. ECONOMY WORRIES: As well as fretting over the scale of the economic slowdown in China following further downbeat economic data earlier this week, investors are beginning to wonder whether the U.S. recovery is as strong as thought. Weak data this week has elevated those concerns, prompting big falls in the price of oil. On Wednesday, oil prices recovered some ground, but not much. A barrel of benchmark New York crude was up 43 cents at $30.31 a barrel while Brent, the international standard traded in London, rose 53 cents to $33.25 a barrel.
THE QUOTE: “Falling oil prices have been one of the key drivers of negative sentiment in stocks. Two days of sharply weaker oil prices have refocused share markets on the potential problems flowing from the bear market in oil,” said Ric Spooner, chief analyst at CMC Markets in Sydney. “Significant cuts in capital expenditure in the energy market are taking their toll on economies,” he said in a commentary. “Markets are also concerned about the potential impact on credit markets that might flow from bankruptcies in the oil sector if oil prices keep falling.” EUROPE WANING TOO: Added to the mix Wednesday were renewed fears over the slowdown in Europe. A closely watched survey from financial information company Markit found the economic recovery in the 19-country eurozone losing steam in January, a sign that the turmoil in global financial markets is beginning to weigh on business activity.
ASIA’S DAY: Japan’s benchmark Nikkei 225 lost 3.2 percent to finish at 17,191.25. South Korea’s Kospi slipped 0.8 percent to 1,890.67. Hong Kong’s Hang Seng was down 2.3 percent at 18,991.59 and China’s Shanghai Composite fell 0.4 percent to 2,739.25. Australia’s S&P/ASX 200 dropped 2.3 percent to 4,876.80. Markets also fell in Taiwan, Southeast Asia, India and New Zealand. US DATA RUN: Further figures later Wednesday, including monthly jobs data from private payrolls firm ADP will be closely monitored in the context of whether the Federal Reserve will follow up its rate hike in December with another one next month. The busy U.S. calendar culminates Friday with the monthly nonfarm payrolls data for January, which often set the market tone for a week or two after their release.
ENERGY: Benchmark U.S. oil was up 29 cents at $30.17 a barrel in electronic trading on the New York Mercantile Exchange after being lower during much of the Asian trading day. The futures contract slid $1.74, or 5.5 percent, to close at $29.88 a barrel in New York on Tuesday; it fell nearly 6 percent the day before. Brent crude, a benchmark for international oils, rose 26 cents to $32.98 a barrel in London. It lost $1.52, or 4.4 percent, to $32.72 on Tuesday. ANALYST TAKE: “We may start to see markets quieten down over the course of the session as we gear up to Friday’s jobs report,” said James Hughes, chief market analyst at GKFX.
CURRENCIES: The dollar fell to 119.93 yen from 120.81 yen the day before. The euro edged down to $1.0919 from $1.0925. ASIA’S DAY: Japan’s benchmark Nikkei 225 lost 3.2 percent to finish at 17,191.25. South Korea’s Kospi slipped 0.8 percent to 1,890.67. Hong Kong’s Hang Seng was down 2.3 percent at 18,991.59 and China’s Shanghai Composite fell 0.4 percent to 2,739.25. Australia’s S&P/ASX 200 dropped 2.3 percent to 4,876.80.
___ CURRENCIES: It was a pretty flat day in currency markets with the euro up 0.1 percent at $1.0933 and the dollar 0.3 percent lower at 119.41 yen.
Follow Yuri Kageyama at: twitter.com/yurikageyama
Her work can be found at: bigstory.ap.org/content/yuri-kageyama
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.