World stock markets rocked by fresh drop in oil prices
london — Europe’s main stock markets tumbled Tuesday, after another sell-off across most of Asia that was sparked by a fresh drop in oil prices, dealers said.
Frankfurt’s benchmark DAX 30 index slumped 2.5 per cent compared with Monday’s finish, as dire German factory orders sparked fresh questions about the health of the eurozone’s biggest economy.
Elsewhere, France’s CAC 40 index shed 2.2 per cent, Britain’s FTSE 100 dropped 1.3 per cent in value and the FTSE-Mib in Milan fell three per cent.
World oil prices languished, striking one-month lows on persistent worries over the global supply glut, weighing on energy shares.
Sentiment failed to win a boost from news that eurozone private sector business activity nudged higher in March after a sharp fall in February, according to a survey from data firm Markit.
“The FTSE 100 was down in early trading following downbeat overnight sessions on Wall Street and in Asia, with volatile crude oil prices and global economic concerns continuing to have an impact on investor sentiment,” said Russ Mould, investment director at stockbroker AJ Bell.
The mood darkened as gloomy data showed that German industrial orders — a key measure of demand for goods in Europe’s top economy — declined in February.
Provisional official data showed a decrease in orders of 1.2 per cent month-on-month in February, weighed down by falling foreign demand. That followed an increase of 0.5 per cent in January.
Analysts polled by financial services firm FactSet had pencilled in a modest increase of 0.3 percent for February.
“A poor February for German factory orders ... adds to eurozone woes,” said analyst Mike van Dulken at traders Accendo Markets.
In Asia and Europe, energy companies nursed heavy losses as oil prices fell further.
“WTI crude is eyeing a move back below $35 per barrel,” noted analyst Tony Cross at traders Trustnet Direct. “As a result it’s the natural resources stocks that are scattered across the foot of the index, with Royal Dutch Shell and BP also being dragged very much into the fray.”
BP slid 2.2 per cent to 337.00 pence and Shell’s ‘A’ shares fell 2.4 per cent to 1,636.5 pence. In Paris, French peer Total saw its stock decline 1.9 per cent to 38.43 euros.
US stocks opened lower Tuesday, with the Dow dropping 0.6 per cent in initial trading, as shares in drugmaker Allergan plummeted on new US rules threatening its takeover by Pfizer.
“Allergan and Dow member Pfizer are garnering attention as the US Treasury Department on Monday introduced new rules to possibly threaten their planned $160 billion merger,” said market analysts at Charles Schwab.
The US Treasury’s new rules aim at stemming the tide of mergers between US and foreign businesses designed to sharply lower the US company’s tax bill.
Treasury Secretary Jacob Lew said the toughened regulations target companies moving their headquarters, but not their US operations, to low-tax domiciles abroad via so-called inversion deals.
Tokyo stocks tumbled 2.4 per cent as the yen moved towards an 18-month high against the US dollar, Shanghai Composite up 1.5 per cent at 3,053.07 and Hong Kong fell 1.6 per cent at 20,177.00..