World markets sink as oil tumbles, European equities boosted by Italy

S&P 500 index confirms correction territory

NEW YORK, Nov 24, (Agencies): Oil prices plunged on Friday, sending world stock markets lower as lagging energy shares weighed down Wall Street.

Tumbling oil prices pushed US energy shares down more than 3 percent. As a result, the benchmark S&P 500 stock index ended lower to confirm correction territory, having dropped more than 10 percent from its record closing high in late September. Trading volume was light in a shortened session after the Thanksgiving holiday.

MSCI’s gauge of stocks across the globe also fell.

Underwhelming economic data from Europe also dimmed market sentiment, investors said. Surveys of German and euro zone purchasing managers came in weaker than expected.

In response to falling oil and US stock prices, benchmark US Treasury yields fell to eight-week lows on Friday as investors moved to safe-haven buying of long-dated US government bonds.

The MSCI All-Country World Index shed 0.52 percent.

In contrast to US stocks, European equities rose, led by a rally in Italian stocks as the country’s bond yields fell after a press report that EU Affairs Minister Paolo Savona is considering resigning over the government’s decision to challenge European Union budget rules. Savona denied the report.

The pan-European STOXX 600 index rose 0.4 percent.

US

US stocks closed lower in a shortened post-holiday trading session on Friday as the energy sector tumbled on continued weakness in oil prices, and the benchmark S&P 500 confirmed its second correction of 2018.

The three major US indexes all fell well over 3 percent for the week, with the Dow industrials and the Nasdaq posting their biggest weekly percentage declines since March.

The S&P 500 ended about 10.2 percent down from its Sept 20 closing record high, confirming it had entered a correction.

The S&P last entered a correction earlier this year after posting a then record high in late January, and falling more than 10 percent by early February. That correction lasted roughly seven months, until the index posted a fresh record high in late August.

On Friday, the S&P 500 energy sector fell 3.3 percent, dragged down by another plunge in oil prices, amid fears of a supply glut even as major producers consider cutting output. Oil prices have plunged some 30 percent since the start of October.

Shares of oil majors Chevron and Exxon Mobil dropped 3.4 percent and 2.7 percent, respectively.

Aside from energy, declines in Ap- ple and Amazon weighed on the S&P 500, underscoring the drop in technology and internet stocks that has marked this latest swoon in equities.

The Dow Jones Industrial Average fell 178.74 points, or 0.73 percent, to 24,285.95, the S&P 500 lost 17.37 points, or 0.66 percent, to 2,632.56 and the Nasdaq Composite dropped 33.27 points, or 0.48 percent, to 6,938.98.

Trading volume was relatively light with the session ending at 1 pm ET following the Thanksgiving Day holiday, so the day’s action might carry less significance.

Volume on US exchanges was about 3.4 billion shares, well below the 8.2 billion average for the full session over the last 20 trading days.

The S&P 500 retailing index fell 0.6 percent.

United Technologies Corp rose 2.6 percent after the company won Chinese regulatory approval to buy aircraft parts maker Rockwell Collins Inc. Rockwell shares jumped 9.2 percent.

Investors will be focusing on next week’s G20 summit in Buenos Aires, where US President Donald Trump and his Chinese counterpart Xi Jinping are expected to hold talks amid a trade dispute that has weighed on financial markets.

Declining issues outnumbered advancing ones on the NYSE by a 1.36to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favored advancers.

The S&P 500 posted 1 new 52-week highs and 19 new lows; the Nasdaq Composite recorded 15 new highs and 74 new lows.

Europe

European shares closed the day higher in choppy trade on Friday but notched up their second straight week of losses as concerns about slowing global growth, weak earnings, and a US-China trade war drove investors away from the region’s equities.

The pan-European STOXX 600 closed up 0.4 percent, while Italy’s FTSE MIB outperformed with a 0.6 percent rise led by rebounding banks and technology stocks, while Italian equities rallied as bond yields fell.

FTSE 100 was the only major bourse in the red at the close of volatile trading as oil prices sank.

Data showing weak business activity data for the bloc also fanned concerns about the growth outlook, prompting a further scaling back of ECB rate-hike expectations.

The European oil and gas index sank 2.9 percent to April lows as the crude rout deepened in afternoon trade.

Airlines benefited from the continued sell-off with Lufthansa up 2.9 percent and leading the DAX and easyJet up 4.1 percent. Fuel makes up a significant portion of the sector’s costs.

Italian banks also climbed after a media report that Italy’s EU Affairs Minister Paolo Savona is considering resigning over the government’s decision to challenge European Union budget rules. Savona and Italian Deputy Prime Minister Matteo Salvini denied the report.

Italy’s banks’ index climbed 1.3 percent as bond yields slid, boosting lenders who have large sovereign bond portfolios.

Generali rose 2.3 percent, while Banca Mediolanum and Unicredit were up 2.1 percent.

Renault shares rose 2.3 percent after Deputy CEO Thierry Bollore said he would safeguard the carmaker’s interests in its alliance with Nissan, following the ouster of Carlos Ghosn as Nissan chairman over financial misconduct allegations.

The carmaker’s shares dropped 8.4 percent on Monday when CEO Carlos Ghosn was arrested over allegations of financial misconduct.

Telecoms equipment makers Ericsson and Nokia climbed 3.9 and 1.5 percent respectively as traders saw a positive read-across from a Wall Street Journal report that the US government is asking allies to shun telecoms equipment from China’s Huawei.

Earnings disappointments drove the biggest losses on the STOXX.

Shares in stone wool insulation maker Rockwool plunged 14 percent after its third-quarter results.

German industrial machinery group GEA fell 10 percent after it cut its outlook for 2018 cashflow margin.

Industrials firms have delivered weaker results as the slowdown in European growth, and trade war fears, hit those most vulnerable to the cycle first.

Asia

Fresh fears over headwinds facing the global economy saw Asian stocks plunge into the red Friday, in light holiday trading after US markets were closed for Thanksgiving.

Chinese shares led the downward charge as Shanghai slumped by more than two percent, with the tech sector hit hard by a Wall Street Journal report that Washington is urging its allies to avoid using equipment from Chinese telecoms giant Huawei.

With markets in Japan and India closed for holidays, Hong Kong, Taipei and Seoul all chalked up losses on Friday, as Asian stocks headed for a third week in the red.

Sydney, which saw gains of 0.4 percent, was a rare bright spot.

Key figures around 0820 GMT Tokyo - Nikkei 225: Closed for holiday

Hong Kong - Hang Seng: DOWN 0.4 percent at 25,927.68 points (close)

Shanghai - Composite: DOWN 2.5 percent at 2,579.48 points (close)

Dollar/yen: DOWN at 112.85 yen from 113.00 yen