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Global Stocks Slide on Oil, China Fears


Riva Gold and

Christopher Whittall

Updated Jan. 14, 2016 8:49 a.m. ET

Stocks in Europe and Asia resumed the steep declines that have dominated the year Thursday, as fears around commodity prices and the outlook for global growth continued to batter markets.

The Stoxx Europe 600 was last down 2.2%, having fallen as much as 3% earlier, after Asian shares followed Wall Street to close sharply lower.

Meanwhile, U.S. stock futures recovered from earlier losses to point to a small opening gain for the S&P 500. Changes in futures don’t necessarily reflect market moves after the opening bell.

Oil prices remained volatile after Brent crude dipped below $30 a barrel in Asian trade.

rolex dela pena/European Pressphoto Agency

Concerns about China’s slowing economy, the depreciation of its currency and turmoil in its stock markets have hit financial markets at the start of the year, dragging down commodity prices and causing investors to consider the implications for corporate earnings and global growth.

“A lot of investors are sitting on the sidelines trying to figure out what on earth is going on,” said Iain Stealey, a portfolio manager at J.P. Morgan Asset Management.

The S&P 500 is down 7.5% so far this year, while European stocks are down nearly 8%.

Investors have been on edge since the opening day of the year, when weak Chinese data sent local stocks plunging, sparking a selloff across global markets. Beijing’s moves to weaken its currency last week have also spooked investors worried about the on impact China’s trading partners.

“Markets don’t like uncertainty,” said Mr. Stealey.

Concern over the health of the world’s second-largest economy has also sent oil and metal prices tumbling. Brent futures were last up 1.5% at $30.77, but remain down over 17% this year and are hovering at multiyear lows amid an ongoing supply glut.

Copper and tin futures hit 6½-year lows Thursday in London trade.

In contrast, gold is up 2.5% this year, last at $1,086, as investors have piled into haven assets.

Multiple blasts and gunfire that killed seven people in the Indonesian capital on Thursday, in what authorities called a terrorist attack, added to the nervous sentiment in global markets.

In Asia, China’s Shanghai Composite Index staged a late-session rally on Thursday to gain nearly 2%, but earlier fell 2.8% to breach its lows from the August crash. It remains down 15% this year.

An investor looks at an electronic board displaying stock prices at a brokerage house in Beijing on Thursday.

An investor looks at an electronic board displaying stock prices at a brokerage house in Beijing on Thursday.


Associated Press

Japan’s Nikkei Stock Average lost 2.7% as investors plowed into the perceived safety of its currency early in the session, hitting the shares of exporters. A stronger yen dents the competitiveness of Japanese companies that sell their goods abroad.

Losses in Europe were led by the auto sector after shares in Renault fell over 10% on a report of antifraud searches relating to emissions tests.

The Dow Jones Industrial Average ended down 2.2% Wednesday, off nearly 10% from its highs late last year.

Falling oil prices, a stronger dollar and uncertainty over the global growth outlook have caused investors to temper their expectations for the U.S. earnings season, which gets under way this week.

“There are increasing concerns about the strength of the global business cycle,” said Ralf Zimmermann, equity strategist at Bankhaus Lampe, who highlighted recent weakness in Chinese and U.S. manufacturing data

“There are still more risks ahead,” he added.

The market volatility follows the Federal Reserve’s interest-rate increase in December, marking an end to years of easy-money policies that have boosted asset prices.

Now, investors are parsing employment and inflation data to get a sense of when the central bank could make its next interest-rate move. Initial jobless claims, a proxy for layoffs, rose to 284,000 in the week ended Jan. 9, the Labor Department said Thursday. While the level of claims was higher than economists had expected, last week’s rise may reflect holiday-season data volatility rather than a deteriorating labor market.

“There’s a steady appreciation the Fed no longer has investors’ backs,” said Alastair George, chief strategist at Edison Investment Research.

Despite the volatility, some analysts still don’t expect U.S. stocks to fall steeply this year.

“We expect a pretty unspectacular performance, but not a disastrous one,” said John Higgins, chief markets economist at Capital Economics.

Most of the time, a major bear market only occurs in and around recessions, he said, which he doesn’t expect in the U.S. this year.

On Thursday, before U.S. markets opened, J.P. Morgan Chase


said its fourth-quarter profit rose thanks in part to higher earnings within its investment-banking division.

Elsewhere, in currency markets, the dollar was last up 0.3% against the yen at ¥117.8010, reversing a move earlier in the day that saw the yen near a five-month high against the U.S. currency.

The euro was up 0.1% against the dollar at $1.0890 after data showed an expansion in German economic growth.

—-Ese Erheriene contributed to this article.

Write to Riva Gold at [email protected] and Christopher Whittall at [email protected]

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Global Stocks Slide on Oil, China Fears Reviewed by on . By Riva Gold and Riva Gold The Wall Street Journal CANCEL Biography @GoldRiva [email protected] Christopher Whittall Christopher Whittall The Wall Street Journa By Riva Gold and Riva Gold The Wall Street Journal CANCEL Biography @GoldRiva [email protected] Christopher Whittall Christopher Whittall The Wall Street Journa Rating:
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