Falling Oil Prices Help Drag European Stocks Lower
November 22 2018 - 05:57AM
Dow Jones News
By Christopher Whittall
Stocks in Europe headed lower Thursday, partially reversing a
rally in the previous session, as investors remained jittery
following the recent volatility in global markets.
The Stoxx Europe 600 fell 0.7% in European morning trade, with a
roughly 1% decline in oil prices adding to the negative tone. The
pan-European index rose over 1% Wednesday to snap a five-day-losing
streak.
S&P 500 futures fell 0.4% after the index rose 0.3%
Wednesday. A rebound in technology and energy stocks had helped
steady U.S. benchmark indexes following a sharp selloff that ripped
through markets earlier in the week. U.S. markets are closed
Thursday for the Thanksgiving holiday.
The recent lurch lower in oil prices has weighed on energy
companies, adding to the market volatility that has been fueled by
concerns about slowing global growth, trade tensions and heady
valuations in the technology sector.
Oil prices resumed their downward slide Thursday with Brent
crude, the international benchmark, down 1% at $62.86 a barrel,
taking losses to over 21% from a month earlier. Analysts are
concerned that the slide in oil prices is signaling weaker global
growth, as well as reflecting the effects of oversupply.
Another source of volatility has been the shares of large tech
firms that helped drive the S&P 500 up nearly 10% this year to
its peak in mid-September. The benchmark index is now in negative
territory for the year following the weekslong selloff, leading
investors to question whether the nearly 10-year bull market is
running out of steam.
"This is the ultimate question. Have we reached the end of the
cycle and is the equity market anticipating that?" said Jeroen
Blokland, a senior portfolio manager at Dutch asset manager
Robeco.
Mr. Blokland believes that the economic cycle has further to
run--highlighting the strength of the U.S. consumer in
particular--and so thinks the selloff represents a buying
opportunity for global stocks.
"Equities, especially outside the U.S., have room to go up," he
added.
In Europe, mining stocks led the way lower with the Stoxx Europe
600 Basic Resources subindex slipping 1.5%. That takes losses in
the sector to around 11% since the start of October.
Utility stocks were also under pressure, with Centrica PLC down
over 8% after the owner of British Gas forecast lower-than-expected
2018 earnings.
The downbeat session in Europe underlines how investors remain
skittish amid the heightened volatility. In Europe, concerns over
political developments in the U.K. and Italy have weighed on local
markets. More broadly, recent data showing that economic output in
Japan and Germany contracted in the third quarter have reminded
investors of the uncertain outlook.
"We are late cycle and that has implications for markets in a
number of different areas. An increase in volatility is one of
them," said Toby Gibb, a portfolio manager at Fidelity
International.
"There are a number of things for people to worry about at the
moment," added Mr. Gibb, citing Brexit, political risks in Italy,
trade tensions and a potential slowdown in China.
Markets in the Asia-Pacific region were mixed. Australia's
S&P ASX 200 rose 0.9% to snap a four-session losing streak.
Japan's Nikkei Stock Average climbed 0.7% after two days of
declines. Hong Kong's Hang Seng Index was up 0.2%. China's Shanghai
Composite Index fell 0.2%.
In currency markets, the WSJ Dollar Index, which measures the
buck against a basket of 16 others, was down 0.1%.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
November 22, 2018 05:42 ET (10:42 GMT)
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