Oil pares losses as US tech stocks sink
The price of Brent crude plunged to $62 a barrel on Tuesday, its lowest level since last December and 28% off its highs four months ago.
It rose 82 cents, or 1.3% in early morning trade to settle at $63.35 as investors and oil producers grappled over the direction of world trade.
The fall could lead to lower petrol and diesel prices for motorists but there are concerns of a global slowdown, exacerbated by a trade war between the US and China.
Meanwhile, production is at or close to record highs in the US, Russia and Saudi Arabia.
This morning’s rebound in the price came after a report by the American Petroleum Institute late on Tuesday that US commercial crude inventories fell unexpectedly by 1.5 million barrels last week.
Record crude imports by India of almost 5 million barrels per day also supported prices. Traders expect further weakness until there is clarity on output from OPEC on 6 December.
Most Southeast Asian stock markets fell after a continued sell-off on Wall Street. The Nikkei in Japan touched a three-week low before paring losses.
Technology stocks took a hammering in the US where all the main markets were sharply down. At th open the Dow Jones Industrial Average lost almost 600 points, adding to the prior session’s drop of almost 400 points. It ended the session down 2.21% at 24,465.64, the S&P 500 was off 1.82% at 2,641.89, and the Nasdaq 100 was 1.75% lower at 6,526.96.
Apple fell 5% down and has lost 20% of its value since last month. The company was rocked by reports that it has slashed production orders in recent weeks for all three iPhone models that were unveiled in September.
All the so-called ‘FAANG’ (Facebook, Amazon, Apple, Netflix and Alphabet (Google) stocks are now all in bear market territory.
Shares in London closed down at their lowest level in three weeks with fears over Brexit dominating sentiment.
The FTSE 100 finished almost 53 points or 0.8% lower at 6,947.92, its lowest level since late October, with mining, oil and gas and banking sectors among the biggest fallers. This morning i opened 0.21%, or 12.3 points higher at 6,962. The FTSE 250 was up 0.19%.
Sterling was 0.3% lower against the dollar a $1.2813 but was up 0.3% against the euro at €1.1252.
Andrew Milligan, the head of global strategy at Aberdeen Standard Investments is gearing up for a volatile new year. He foresees a 5% to 15% global-market correction next year, broader than the 10% swing in 2018.
He bases his forecast on higher interest rates, slower earnings growth, lofty valuations among growth stocks, the US-China trade dispute, fading fiscal stimulus, and the ageing of the US economic cycle.
However, he adds that: “Barring a major shock, share prices will eventually recover as the outlook for company profits remains positive, even if margins are coming under pressure.”