Both Brent and US crude fell to their lowest levels since October 2017, and prices were on course for their biggest one-month decline since late 2014. Although the Organization of the Petroleum Exporting Countries is expected to curb output, rising US oil supply has fueled persistent concerns about a global surplus.
Tumbling oil prices pushed US energy shares down more than 3 per cent. As a result, the benchmark S&P 500 stock index edged lower in light trading after the Thanksgiving holiday. MSCI’s gauge of stocks across the globe also fell.
“Low oil prices hurt us,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “It’s helpful to the consumer in the very short term, but it greatly impacts (capital expenditures). That’s an issue.” Prices of base metals, including nickel and copper, fell sharply on worries of weakening demand in China and a slowdown in global growth as a result of trade tensions between China and the US.
In response to falling oil and US stock prices, benchmark US Treasury yields fell to eight-week lows on Friday as investors moved to safe-haven buying of long-dated US government bonds.
The dollar index, which measures the greenback against a basket of six currencies, also advanced, up 0.2 per cent, in keeping with the theme of declining risk appetite.
In contrast to US stocks, European equities rose, led by a rally in Italian stocks as the country’s bond yields fell after a press report that EU Affairs Minister Paolo Savona is considering resigning over the government's decision to challenge European Union budget rules. Savona denied the report.
The pan-European STOXX 600 index rose 0.4 per cent. Its gains were capped, however, by weak economic data. Surveys of German and euro zone purchasing managers came in weaker than expected. The disappointing readings pushed the euro down 0.7 per cent.
Elsewhere in the currency market, the pound was down 0.5 per cent on concerns over the passage of an agreement for Britain to leave the European Union.
“There is significant weakness in Europe as a whole: everything from French to German data to Brexit talk,” said Bruderman Asset Management's Pursche.