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Slump in oil prices and China data weighs on stocks

Reuters  |  NEW YORK 

By Chuck Mikolajczak

NEW YORK (Reuters) - Stocks around the globe suffered their biggest drop in two weeks on Friday as weak Chinese economic data sapped demand for equities while weakened again on Friday.

U.S. stocks were broadly lower, with falling more than 1.0 percent as oil saw a six-month low and U.S. fell below $60 for the first time since March.

Data from added to the downward pressure, showing factory-gate inflation slowed for the fourth month in October on cooling domestic demand and

Bad debts at Chinese brokers and banks are also causing concern.

In the U.S., prices rose more than expected in October and at their fastest pace in six years, but measures of underlying price pressure cooled, bolstering the view that is not facing a resurgence in inflation.

European shares dipped as and sold off, but they managed to end the week with a small gain.

"Oil is spooking the market. If are going to go lower that's another sign that the global economy is going to slow its growth," said Chris Zaccarelli, at Independent Advisor Alliance in Charlotte, "It looks like a slow (stocks) sell off. All day long its been drifting lower."

The Dow Jones Industrial Average <.DJI> fell 201.92 points, or 0.77 percent, to 25,989.3, the <.SPX> lost 25.82 points, or 0.92 percent, to 2,781.01 and the <.IXIC> dropped 123.98 points, or 1.65 percent, to 7,406.90.

Equities snapped a streak of seven straight days of gains on Thursday after the held interest rates steady but appeared to remain on track to raise its policy interest rate next month.

The Federal Reserve decision disappointed some investors who had hoped that the sharp share price falls during what has been called "Red October" might have encouraged to take a more dovish approach toward monetary policy.

The pan-European index <.STOXX> lost 0.37 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 1.08 percent.

The U.s. dollar, which had weakened sharply after Tuesday's U.S. mid-term elections, was up for a second straight day and on track for a fourth straight week of gains.

Further dollar gains can pose headwinds for risky assets as that translates into tightening financial conditions as most emerging market economies borrow in dollars. A strong dollar could also hurt earnings of multinational U.S. corporations.

The dollar index <.DXY> rose 0.19 percent, with the euro down 0.26 percent to $1.1333.

The equity weakness pushed bond yields lower. 10-year notes last rose 12/32 in price to yield 3.1875 percent, from 3.232 percent late on Thursday.

fell to multi-month lows as global supply increased and investors worried about the possibility of slowing fuel demand, putting U.S. on track for the longest stretch of daily declines since 1984.

U.S. Intermediate crude settled down 0.79 percent at $60.19 per barrel and Brent settled at $70.18, down 0.67 percent on the day.

(Additonal reporting by Sinead Carew; Editing by Clive McKeef)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, November 10 2018. 03:04 IST