US stocks tumble to end bruising week as OPEC deal lifts oil prices
AFP – Wall Street closed out a bruising week on an ugly note on Friday as unease over the US-China trade war prompted another sell-off, while an OPEC deal lifted oil prices.
Major US indices fell more than two percent to close the market’s worst week since March and one that left both the Dow and S&P 500 in negative territory for the year.
European and Asian markets were mixed, with London, Paris and Tokyo gaining and Hong Kong and Frankfurt falling modestly.
The Dow finished 2.2 percent lower at 24,388.95. The blue-chip index lost 4.5 percent for the week.
The declines on Wall Street followed a mixed US jobs report that had initially helped lift stocks early in the session, in part because it was seen as boosting the likelihood that the US Federal Reserve could soon pause interest rate hikes.
But the market quickly went negative, with the losses accelerating following hawkish comments from White House trade advisor Peter Navarro in a CNN interview that emphasized that the United States would raise tariffs on China if a deal is not reached.
Investors have been rattled by the US-initiated arrest of a top Chinese Huawei executive that was seen as exacerbating the US-China clash.
Huawei Chief Financial Officer Meng Wanzhou, who appeared in a Canadian court on Friday, faces US fraud charges related to sanctions-busting business dealings with Iran.
"The market is kind of falling back into our interpretation of where we are in the US-China trade war," said Art Hogan, chief market strategist at B. Riley FBR.
The Huawei arrest dampened expectations that the United States and China could quickly hash out a deal, Hogan added.
Navarro, in an interview with CNBC later Friday, said the stock market’s volatility reflected the impact of higher interest rates much more than Trump’s trade policy.
"I really think it is a false narrative to blame all of this volatility on China policy," Navarro told CNBC. "Trade is a very small percentage of our overall economy."
– Did OPEC cut enough? –
Oil prices moved higher after OPEC members and 10 other oil producing nations agreed Friday to cut output by 1.2 million barrels a day.
While the amount is bigger than expected, some analysts said oil prices could still be vulnerable.
"I would describe the cuts as close but not close enough with regards to eliminating the global oil glut. A combined reduction of 1.5 mbpd was needed to avoid a supply surplus in the first half of next year," said Stephen Brennock, an oil expert for PVM Oil Associates.
London’s FTSE 100 benefited from the oil stock boost closing up 1.3 percent, with BP and Royal Dutch Shell both rising more than two percent. Paris was also slightly higher, but Frankfurt slumped as investors continue to worry about trade tensions between Washington and Beijing.
– Key figures around 2200 GMT –
New York – Dow Jones: DOWN 2.2 percent at 24,388.95 (close)
New York – S&P 500: DOWN 2.3 percent at 2,633.08 (close)
New York – Nasdaq: DOWN 3.1 percent at 6,969.25 (close)
London – FTSE 100: UP 1.1 percent at 6,778.11 (close)
Frankfurt – DAX 30: DOWN 0.2 percent at 10,788.09 (close)
Paris – CAC 40: UP 0.7 percent at 4,813.13 (close)
EURO STOXX 50: UP 0.4 percent at 3,058.53 (close)
Tokyo – Nikkei 225: UP 0.8 percent at 21,678.68 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 26,063.76 (close)
Shanghai – Composite: FLAT at 2,605.89 (close)
Euro/dollar: UP at $1.1406 from $1.1374 at 2130 GMT
Dollar/yen: FLAT at 112.68 yen
Pound/dollar: DOWN at $1.2742 from $1.2781
Oil – Brent Crude: UP $1.61 at $61.67 per barrel
Oil – West Texas Intermediate UP $1.12 at $52.61 per barrel