Global stock markets slide on oil price slump

Oil price

European stocks sank on Wednesday, after losses in Asia and on Wall Street, as the energy sector took a beating from an oil price slump.

Crude prices were lower again, after diving more than two percent on Tuesday on increasing fears of a global supply glut, as continued production in the US and elsewhere offsets an OPEC output cut deal.

“Cheap oil is taking its toll on the global equity markets,” noted analyst Ipek Ozkardeskaya at trading firm London Capital Group.

Crude prices are considered crucial to the smooth running of world financial markets because the commodity oils the wheels of the global economy.

By midday, the London stock market had shed 0.4 percent, while Frankfurt fell 0.5 percent and Paris wiped out 0.8 percent in value compared with the close on Tuesday.

“European equities are in the red… as the slump in the price of oil continues to weigh on market sentiment,” said analyst David Madden at CMC Markets.

“The other fear about falling oil prices is declining inflation, as it can hamper growth prospects.”

New York oil on Tuesday hit a seven-month low at $42.75 per barrel, and London Brent crude struck a similar nadir at $45.42.

Prices later recovered somewhat but remained on a downward trend on Wednesday.

The oil slump saw energy firms drag down Wall Street on Tuesday.

The selloff continued in Asia, with Tokyo down 0.5 percent, Hong Kong losing 0.6 percent and Sydney sinking 1.6 percent.

Shanghai bucked the trend to end up 0.5 percent after the US-based MSCI finally approved Chinese mainland-listed stocks, or A-shares, for inclusion in its emerging markets index.

Elsewhere Wednesday, investors digested British Queen Elizabeth II’s speech to parliament focused heavily on the UK’s Brexit plans.

British Prime Minister Theresa May presented eight draft laws to take Britain out of the European Union in a legislative programme read out by the queen.

The laws include the “Great Repeal Bill” to overhaul existing EU legislation and separate bills on customs, trade, immigration, fisheries and agriculture.