Global fall as brief oil rally fades
Global stocks fell Monday, reversing early gains, as a brief rally in oil prices faded. Stock futures pointed to a 1% opening loss for the S&P 500. Changes in futures don't necessarily reflect market moves after the opening bell. The Stoxx Europe 600 was down 2.1% midmorning after starting the day higher.
"Selling on the bounces, however brief, continues," said Chris Beauchamp, market analyst at IG, adding "people still seem keen to offload risk at any price." Losses were heaviest in the technology sector, following a downbeat finish on Wall Street. A dive in technology shares and a mixed jobs report added to uncertainty about the U.S. economy on Friday, sending stocks lower across the board.
Job creation slowed in January after three consecutive months of gains, data showed, but a slight fall in unemployment and a modest uptick in wages left the prospect of further U.S. interest rate increases this year on the table.
Meanwhile, Brent crude oil reversed early gains Monday to fall 0.8% at $33.78 a barrel, weighing on sentiment. While falling oil prices benefit consumers, a rise or stabilization in oil prices "would alleviate strains from the global financial system," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, which manages $20 billion in assets. Brent crude prices are down over 9% this year amid a continuing supply glut and fears over slowing global growth. "A lot of emerging market economies have revenues dependent on oil and commodities and debt denominated in U.S. dollars-that mix has proven pretty toxic," he added. Saudi oil minister Ali al-Naimi met with his Venezuelan counterpart on Sunday but didn't announce any plans for a production cut.
In Asian trade, Japan's Nikkei Stock Average gained 1.1% as the yen fell against the dollar, while Australia's S&P ASX 200 ended flat. Other markets in Asia were closed for the Lunar New Year Holiday, but China remained in focus for global investors. Data released over the weekend showed China's foreignexchange reserves fell to their lowest level in over three years, though many analysts had expected an even larger drop.The latest reserves data added to concerns that China may be forced to further weaken its currency.