US stocks tumble to end bruising week as Opec deal lifts oil prices

Major US indices fell more than 2 per cent to close the market’s worst week since March and one that left both the Dow and S&P 500 in negative territory for the year. — Reuters pic
Major US indices fell more than 2 per cent to close the market’s worst week since March and one that left both the Dow and S&P 500 in negative territory for the year. — Reuters pic

NEW YORK, Dec 8 — Wall Street closed out a bruising week on an ugly note yesterday as unease over the US-China trade war prompted another sell-off, while an Opec deal lifted oil prices.

Major US indices fell more than 2 per cent to close the market’s worst week since March and one that left both the Dow and S&P 500 in negative territory for the year.

European and Asian markets were mixed, with London, Paris and Tokyo gaining and Hong Kong and Frankfurt falling modestly.

The Dow finished 2.2 per cent lower at 24,388.95. The blue-chip index lost 4.5 per cent for the week.

The declines on Wall Street followed a mixed US jobs report that had initially helped lift stocks early in the session, in part because it was seen as boosting the likelihood that the US Federal Reserve could soon pause interest rate hikes.

But the market quickly went negative, with the losses accelerating following hawkish comments from White House trade advisor Peter Navarro in a CNN interview that emphasized that the United States would raise tariffs on China if a deal is not reached.

Investors have been rattled by the US-initiated arrest of a top Chinese Huawei executive that was seen as exacerbating the US-China clash.

Huawei Chief Financial Officer Meng Wanzhou, who appeared in a Canadian court yesterday, faces US fraud charges related to sanctions-busting business dealings with Iran.

“The market is kind of falling back into our interpretation of where we are in the US-China trade war,” said Art Hogan, chief market strategist at B. Riley FBR.

The Huawei arrest dampened expectations that the United States and China could quickly hash out a deal, Hogan added.

Navarro, in an interview with CNBC later Friday, said the stock market’s volatility reflected the impact of higher interest rates much more than Trump’s trade policy.

“I really think it is a false narrative to blame all of this volatility on China policy,” Navarro told CNBC. “Trade is a very small percentage of our overall economy.”

Did Opec cut enough?

Oil prices moved higher after Opec members and 10 other oil producing nations agreed yesterday to cut output by 1.2 million barrels a day.

While the amount is bigger than expected, some analysts said oil prices could still be vulnerable.

“I would describe the cuts as close but not close enough with regards to eliminating the global oil glut. A combined reduction of 1.5 mbpd was needed to avoid a supply surplus in the first half of next year,” said Stephen Brennock, an oil expert for PVM Oil Associates.

London’s FTSE 100 benefited from the oil stock boost closing up 1.3 per cent, with BP and Royal Dutch Shell both rising more than 2 per cent. Paris was also slightly higher, but Frankfurt slumped as investors continue to worry about trade tensions between Washington and Beijing. — AFP

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