MOSCOW, December 1 (Sputnik) — Stock markets have dropped worldwide after a sharp fall in oil prices, dragging down the rest of commodities, along with mainland China’s poor manufacturing data and slower-than-expected US holiday consumer spending, triggering large capital flight from emerging markets.
Hong Kong’s Hang Seng saw a slide of 2.6%, led by the mainland, primarily, manufacturing sector stocks, which fell 2.9%, as evidenced by Bloomberg data. The Shanghai Composite slid only 0.1% after a straight week of gains, as international investors sold part of their recently acquired mainland assets via the Stock Connect. Australia’s S&P/ASX 200 also fell by 2%, as it lists many mainland China-based enterprises. Energy shares plunged a massive 15%, a record since 2008 on oil and commodities retreat.
Mid-eastern equities, usually stable, fell dramatically today, Dubai’s General has lost 2.1%, in line with the 4.7% drop yesterday. Saudi Arabia's main index, the Tadawul, went flat after a massive drop of 4.8% the day before, a three-year record. The main reason behind these losses is dramatically decreasing oil prices. Oil may be heading for a stable price of $40 a barrel as the global market for ‘black gold’ is undergoing significant changes. The main reason behind the oil slump is the ‘price war’ between the US and Saudi Arabia, in an attempt to win a larger share of the world market.
“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” Daniel Yergin of IHS Inc. told Bloomberg. “There’s a change in psychology. There’s going to be a higher degree of uncertainty.”
In Europe, the Stoxx Europe 600 Index retreated 0.5%, the all-Europeans FTSEurofirst 300 slid 0.7% on poor China’s manufacturing PMI data. China’s November PMI dropped to an 8-months low of 50.3 in November, compared to October’s 50.8, according to Reuters. PMI, the Purchasing Managers’ Index, indicates growth if higher than 50, while below 50 means contraction.
"There's downward pressure on many commodities. That is a function of disappointing global growth and especially the slowdown in China," Wouter Sturkenboom of Russell Investments said of the European markets as quoted by Reuters. "That is negative for equities," he added.
A barrel of Brent crude fell in price by 1.53%, to $69.08, while the COMEX gold price dropped by 1.03%. Most agricultural commodities slid as well, while Bloomberg Commodity Index retreated 0.54%. As a result, commodity-backed currencies fell somewhat, with Australian dollar down by 0.7%, to 0.8447 USD, Malaysia’s ringgit down by 1.7% to 3.4340 USD, the biggest decline since June 1998, and Russia’s rouble down 3% to 64.76 against the euro and 52.1330 per dollar.