Stock markets worldwide tumbled on Friday as falling Brent crude oil prices to seven-year lows and a drop in China's yuan currency stoked investor risk aversion ahead of a widely anticipated US interest rate increase next week.
All three major US indexes sank over one per cent, as crude prices plunged on continued oversupply concerns. Indeed, the International Energy Agency said it sees the oil glut worsening in 2016, as demand slows and Opec shows no signs of slowing production.
A fall in China's yuan to its lowest in four-and-a half years on concerns over the slowing world No 2 economy, and expectations of a US rate hike, hurt shares worldwide.
European shares slipped to their lowest in two months.
"We have the yuan at 4 and a half year lows and that is causing unease in China and abroad. Last time the yuan fell like this, it caused a jolt for markets and anyone exporting out to China, like the auto makers and luxury brands, will feel the pain from a weaker yuan," Jasper Lawler, market analyst at CMC, said.
In the spot market, the yuan hit 6.4564 against the dollar, its weakest level since July 2011.
MSCI's all-country world equity index, which tracks shares in 45 nations, was down 1.23 per cent, at 394.39.
The Dow Jones industrial average was down 1.1 per cent, at 17,380.59. The S&P 500 was down 1.06 per cent, at 2,030.38. The Nasdaq Composite was off 1.15 per cent, at 4,987.34.
Europe's broad FTSEurofirst 300 index was down 1.86 per cent at 1,401.52. The dollar fell against the euro as concerns over weak commodity prices and the yuan's slump overshadowed solid US retail sales data. Those concerns were unsupportive of further monetary policy tightening by the Fed beyond December's heavily anticipated rate increase.
"These external macro factors could limit the scope of Fed hikes next year and that is weighing on the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The dollar index, which tracks the greenback versus a basket of six currencies, was last down 0.33 per cent, to 97.611. US Treasury debt prices surged as the drop in oil prices and weakness in stocks spurred investors to seek the relative safety of government bonds. Benchmark 10-year US Treasury notes were last up 17/32 in price to yield 2.18 per cent, from a yield of 2.24 per cent late Thursday. Gold prices bounced from earlier losses. Spot gold was up $3.07 at $1,074.21 an ounce.
All three major US indexes sank over one per cent, as crude prices plunged on continued oversupply concerns. Indeed, the International Energy Agency said it sees the oil glut worsening in 2016, as demand slows and Opec shows no signs of slowing production.
A fall in China's yuan to its lowest in four-and-a half years on concerns over the slowing world No 2 economy, and expectations of a US rate hike, hurt shares worldwide.
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Concerns grew that weakness in the yuan could weigh on the global economy and on companies with strong export ties to China.
European shares slipped to their lowest in two months.
"We have the yuan at 4 and a half year lows and that is causing unease in China and abroad. Last time the yuan fell like this, it caused a jolt for markets and anyone exporting out to China, like the auto makers and luxury brands, will feel the pain from a weaker yuan," Jasper Lawler, market analyst at CMC, said.
In the spot market, the yuan hit 6.4564 against the dollar, its weakest level since July 2011.
MSCI's all-country world equity index, which tracks shares in 45 nations, was down 1.23 per cent, at 394.39.
The Dow Jones industrial average was down 1.1 per cent, at 17,380.59. The S&P 500 was down 1.06 per cent, at 2,030.38. The Nasdaq Composite was off 1.15 per cent, at 4,987.34.
Europe's broad FTSEurofirst 300 index was down 1.86 per cent at 1,401.52. The dollar fell against the euro as concerns over weak commodity prices and the yuan's slump overshadowed solid US retail sales data. Those concerns were unsupportive of further monetary policy tightening by the Fed beyond December's heavily anticipated rate increase.
"These external macro factors could limit the scope of Fed hikes next year and that is weighing on the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
The dollar index, which tracks the greenback versus a basket of six currencies, was last down 0.33 per cent, to 97.611. US Treasury debt prices surged as the drop in oil prices and weakness in stocks spurred investors to seek the relative safety of government bonds. Benchmark 10-year US Treasury notes were last up 17/32 in price to yield 2.18 per cent, from a yield of 2.24 per cent late Thursday. Gold prices bounced from earlier losses. Spot gold was up $3.07 at $1,074.21 an ounce.