World stocks, crude slide after oil output accord collapses
HONG KONG - World stock benchmarks sank and crude oil prices slumped Monday after an effort by major oil producing nations to agree on production cuts failed over the weekend.
European stocks fell in early trading, with France's CAC 40 dropping 0.8 percent to 4,461.34 while Germany's DAX shed 0.7 percent to 9.978.68. Britain's FTSE 100 was down 0.5 percent to 6,312.87
U.S. stocks were poised to open lower, with Dow futures retreating 0.4 percent to 17,752.00 and broader S&P 500 futures sliding 0.4 percent to 2,067.30.
Oil prices rebounded somewhat by the time European markets opened. They had tumbled nearly 7 percent after Iran stayed away from a weekend meeting in Qatar of 18 oil producing nations that had been expected to reach an accord on freezing production to support crude oil prices.
"Expectations for the talks to end with an agreement were high, and the lack of one damaged the credibility of future meetings to support the oil market," Bernard Aw of IG said in a commentary.
U.S. crude oil fell $1.28 to $39.08 a barrel in electronic trading on the New York Mercantile Exchange, down 3.2 percent. It sank to a low of $37.61 a barrel, down 6.8 percent, before regaining some of that loss.
Brent crude oil, which is used to price international crude oil, fell $1.08 to $42.02 a barrel early Monday, down 2.5 percent. It tumbled 7 percent in earlier trading.
Japan's Nikkei 225 stock index led declines in Asia, dropping 3.4 percent to end at 16,275.95 as a rising yen and quake-related production halts added to investor worries. Hong Kong's Hang Seng index lost 0.7 percent to 21,161.50 and the Shanghai Composite Index in mainland China shed 1.4 percent to 3,033.66. South Korea's Kospi retreated 0.3 percent to 2,009.10, while Australia's S&P/ASX 200 dipped 0.4 percent to 5,204.90. Taiwan's benchmark also fell while shares in Southeast Asia were mixed.
Oil-related stocks fell, with China's offshore oil and gas producer CNOOC and refiner Sinopec down 3 percent or more during trading before trimming their losses by the close. Commodity shares also fell, including Australian mining giant BHP Billiton, which lost 3 percent.
The slide in oil prices also dragged down currencies of resource-dependent countries. The Australian dollar fell 0.4 percent to 77 cents while the dollar rose 0.7 percent to 3.93 Malaysian ringgit.
"The collapse of the oil production freeze summit has caused a wave of selling across the commodity block currencies at today's open," Stephen Innes, senior trader at OANDA, said in a note to clients. "Traders will be closely monitoring oil prices and the knock-on effect on global equity markets."
Oil prices hit a 12-year low in January, dipping under $30 a barrel, but had risen above $40 in recent days, buoyed by bullish talks surrounding the Doha meeting.
While the deal's collapse sets a downbeat tone for the start of the trading week, investors will remain cautious as they await other news trickling out over the next few days for hints on the global economy's health, including quarterly earnings, U.S. housing data and a European Central Bank meeting.
"People are just sitting on the sidelines still," said Andrew Sullivan of Haitong Securities. "People are very wary of what they're going to do with their money."
Investor sentiment in Japan was also pressured as the yen hovered near its strongest level in 18 months, crimping the outlook for the country's exporters. Meanwhile, two recent powerful earthquakes that struck southern Japan in recent days forced Toyota Motor Corp. to suspend some production because of disruptions to its parts supplies.
The dollar slipped 0.4 percent to 108.43 yen from 108.81. The euro rose to $1.1307 from $1.1282.