Global stock rally fizzles on worries about oil, growth
A Chinese investor monitors stock prices at a brokerage house in Huaibei in central China’s Anhui province Friday, Jan. 15, 2016. Chinatopix via AP FILE PHOTO
NEW YORK, United States—US equity investors quashed a global stock rally Tuesday as hopes of possible Chinese economic stimulus were replaced by renewed worries over falling oil prices.
US stocks, which had jumped in morning trade, veered into negative territory by afternoon as US oil prices fell again on worries about higher petroleum exports from Iran due to the lifting of international sanctions.
In the end, the S&P 500 finished the day barely positive as oil-linked equities, including giants ExxonMobil and Chevron, fell sharply.
“We started higher because oil was up, and then Iran apparently announced the price it was going to sell oil at and it kicked a leg out the oil market,” said Chris Low, chief economist at FTN Financial.
“We’re just sort of waiting for some stability.”
US benchmark West Texas Intermediate closed at $28.46 a barrel down 96 cents (3.3 percent) from Friday, as the International Energy Agency warned the market “could drown” in oversupply with the return of Iranian oil.
Earlier, bourses in Paris, Frankfurt and London all rose 1.5 percent or more, following a 3.2 percent gain in China’s benchmark Shanghai index.
Speculation that Beijing would enact more stimulus came after official government data showed China’s economy expanded 6.9 percent in 2015, which was the slowest growth since 1990.
US stocks also opened strongly, with the S&P 500 rising to a session peak of 1,864.60 in the morning. But the index veered into negative territory and ultimately tacked on just a single point at 1,881.33.
Earnings outlook dim
Besides oil, US investors are at the front end of an earnings season that is expected to be lackluster.
“My base case is muddle,” said Jack Ablin, chief investment officer at BMO Private Bank. “Short of any upside surprises economically, we need to see equity prices fall another 10 percent.”
European commodity stocks performed well, with BHP Billiton climbing 3.0 percent, Arcelor Mittal rising 5.8 percent and German industrial giant Thyssenkrupp gaining 0.5 percent.
But in the US, aluminum producer Alcoa fell 2.3 percent, copper giant Freeport-McMoRan slumped 9.0 percent and industrial machinery maker Caterpillar lost 1.4 percent.
Twitter sank 7.0 percent after suffering an outage for hours in several key markets. A spokesperson for Twitter Europe confirmed the site was down, while users in South Africa, Brazil, the Philippines, Nigeria and Uganda also reported problems.
Jeweller Tiffany fell 5.1 percent as it said worldwide net sales declined three percent in the key November-December period due in part to the strong dollar and weak tourist activity in some markets.
But Delta Air Lines rose 3.3 percent after reporting fourth-quarter earnings of $980 million, compared with a loss of $712 million in the year-ago period. Results were boosted by a 42 percent drop in fuel expenses.
Key figures around 2200 GMT
New York – Dow: UP 0.2 percent at 16,016.02 (close)
New York – S&P 500: UP 0.05 percent at 1,881.33 (close)
New York – Nasdaq Composite: DOWN 0.3 percent at 4,476.95 (close)
London – FTSE 100: UP 1.7 percent at 5,876.80 points (close)
Frankfurt – DAX 30: UP 1.5 percent at 9,664.21 (close)
Paris – CAC 40: UP 2.0 percent at 4,272.26 (close)
EURO STOXX 50: UP 1.5 percent at 2,980.49 (close)
Tokyo – Nikkei 225: UP 0.6 percent at 17,048.37 (close)
Shanghai – Composite: UP 3.2 percent at 3,007.74 (close)
Hong Kong – Hang Seng: UP 2.1 percent at 19,635.81 (close)
Euro/dollar: UP at $1.0912 from $1.0897 Monday
Dollar/yen: UP at 117.59 yen from 117.33 yen
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