Global stocks, dollar fall as oil sell-off resumes

Mon Jan 25, 2016 4:20pm EST
 
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By Richard Leong

NEW YORK (Reuters) - A renewed slump in oil prices due to a persistent global supply glut hurt U.S. and European stock markets on Monday and weighed on the dollar following a rebound in those sectors late last week.

Anxiety over the impact of tumbling energy prices on global economic growth and central bank policies revived safe-haven demand for the yen, gold and U.S. and German government debt.

Crude oil prices fell as much as 6.7 percent as Iraq announced record-high oil production that will feed into an already oversupplied market, wiping out much of the oil price gains from of the biggest-ever daily rallies on Friday.

"Right now, you could track the direction of stocks when you see where oil is trading," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

The oil-led market turbulence since the start of 2016 has raised hopes of more stimulus from major global central banks.

Last week, European Central Bank chief Mario Draghi signaled the bank was open to more monetary stimulus to combat weak growth and inflation in the euro zone.

Traders have bet the Federal Reserve would seek to soothe financial markets after its two-day meeting on U.S. monetary policy that will begin on Tuesday.

Global markets slumped at the start of the year on fears that a slowdown in world No. 2 economy China would spread to the rest of the world, and oil prices sank to 13-year lows.   Continued...

 
Traders work on the floor of the New York Stock Exchange January 25, 2016. REUTERS/Brendan McDermid