Oil prices tumble 3%, drags dollar but global stocks hold ground
Oil prices tumbled 3 percent on Monday and dragged the dollar down, but world stocks clung onto gains in a sign of stabilization after a horrendous start to the year.
Crude oil prices fell 3 percent as Iraq announced record-high oil production feeding into a heavily over supplied market, wiping out much of the gains made in one of the biggest-ever daily rallies last Friday. [O/R]
That tumble briefly weighed on stocks, which recovered ground as hopes of further monetary stimulus by major central banks helped take the edge off the bearish sentiment that has dominated since the start of the year.
The MSCI world equity index .MIWD00000PUS was up 0.1 percent, almost 5 percent above 2-1/2 year lows hit last week.
Asian stocks .MIAPJ0000PUS rose 1.5 percent and moved further away from last week’s four-year low, while U.S. stock futures traded just 0.1 percent lower ESc1.
“Risk-asset markets have received a boost from the European Central Bank hinting at stimulus last week, and investors are also looking at whether the fall in stocks has run its course,” said Philip Shaw, chief economist at Investec in London.
Global markets slumped at the start of the year on fears that a slowdown in China would spread to the rest of the world economy, while oil prices sank to 13-year lows.
German business morale fell to an 11-month low in January, a survey showed, suggesting growing concern among company executives in Europe’s largest economy.
The Ifo survey reading of 107.3 compared with 108.6 in December and was well below 108.4 forecast in a Reuters poll.
