November 23, 2018 / 3:56 AM / 8 months ago

Falling oil prices sink world stocks; supply, growth concerns mount

NEW YORK (Reuters) - Oil prices plunged on Friday on concerns about oversupply, sending world stock markets lower as lagging energy shares weighed down Wall Street.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 21, 2018. REUTERS/Brendan Mcdermid

Both Brent and U.S. crude fell to their lowest levels since October 2017, and prices were on course for their biggest one-month decline since late 2014. Although the Organization of the Petroleum Exporting Countries is expected to curb output, rising U.S. oil supply has fueled persistent concerns about a global surplus.

Tumbling oil prices pushed U.S. energy shares down more than 3 percent. As a result, the benchmark S&P 500 stock index edged lower in light trading after the Thanksgiving holiday. MSCI’s gauge of stocks across the globe also fell.

“Low oil prices hurt us,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “It’s helpful to the consumer in the very short term, but it greatly impacts (capital expenditures). That’s an issue.”

Prices of base metals, including nickel and copper, fell sharply on worries of weakening demand in China and a slowdown in global growth as a result of trade tensions between China and the United States.

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

The dollar index, which measures the greenback against a basket of six currencies, also advanced, up 0.2 percent, in keeping with the theme of declining risk appetite.

The Dow Jones Industrial Average fell 150.43 points, or 0.61 percent, to 24,314.26, the S&P 500 lost 5.45 points, or 0.21 percent, to 2,644.48 and the Nasdaq Composite added 0.38 points, or 0.01 percent, to 6,972.63.

Benchmark 10-year notes last rose 3/32 in price to yield 3.0499 percent, from 3.061 percent late on Wednesday.

U.S. stock and bond markets were closed on Thursday for the Thanksgiving holiday and will close early on Friday.

U.S. crude fell 6.26 percent to $51.21 per barrel and Brent was last at $58.87, down 5.96 percent on the day.

The MSCI All-Country World Index shed 0.02 percent.

In contrast to U.S. 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.[nL8N1XY1HD]

The pan-European STOXX 600 index rose 0.4 percent. Its gains were capped, however, by weak economic data. Surveys of German and euro zone purchasing managers came in weaker than expected.

The disappointing readings pushed the euro down 0.7 percent.

Elsewhere in the currency market, the pound was down 0.5 percent on concerns over the passage of an agreement for Britain to leave the European Union.

“There is significant weakness in Europe as a whole: everything from French to German data to Brexit talk,” said Bruderman Asset Management’s Pursche.

Reporting by April Joyner; Additional reporting by Ritvik Carvalho, Tom Finn and Sujata Rao in London and Andrew Galbraith in Shanghai; editing by Louise Heavens

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