The dollar mostly strengthened following the decision by the Organisation of Petroleum Exporting Countries (Opec) on Thursday, a move that slammed commodity currencies like the Norwegian crown, which fell to five-year lows against the greenback and the euro.
Crude oil tumbled yesterday, knocking down both energy-related shares and currencies after Opec’s decision a day earlier not to cut output reinforced prospects of a worldwide oil supply glut.
Eurozone government bond yields held near record lows as declining energy prices cut into consumer price growth across the bloc and raised the chances of more stimulus from the European Central Bank on increased deflation fears.
A rout in US and European energy shares weighed on equity markets but other sectors edged higher, lifting Wall Street’s Dow industrials and the Nasdaq, while several leading indexes in Europe pared losses in late trade to close slightly higher.
US crude, or West Texas Intermediate, fell almost eight per cent on Opec’s decision and Brent crude fell to $71.12, a low last seen in July 2010. The sell-off since Thursday amounts to about $67 billion in lost market value, Reuters estimates.
The slide could deepen when traders and investors return after Thursday’s US holiday and yesterday’s shortened session. “There’s a notion that yesterday’s selling was overdone, but not everyone is fully back to work yet after Thanksgiving,” said John Kilduff, partner at energy hedge fund Again Capital in New York.
Brent was 85 cents lower at $72.73 a barrel, while US crude fell $5.75 to $67.94 a barrel.
The European oil and gas sector fell 3.5 per cent, while the S&P Energy index fell 6.3 per cent. The energy index in Europe has lost $240 billion in market value since late June, more than the market cap of Royal Dutch Shell Plc , Europe’s biggest oil major, Thomson Reuters data shows.
The pan-European FTSEurofirst 300 rose 0.02 per cent to close at 1,392.70, while MSCI’s all-country world equity index fell 0.4 per cent to 425.54.
Stocks on Wall Street ended mixed in light trading.
The Dow Jones industrial average ended up 0.49 point, or 0 per cent, at 17,828.24. The S&P 500 fell 5.26 points, or 0.25 per cent, to 2,067.57 and the Nasdaq Composite added 4.31 points, or 0.09 per cent, to 4,791.63.
German 10-year yields – the benchmark for eurozone borrowing – were down a fraction at 0.70 per cent. Yields on benchmark 10-year US Treasuries fell to 2.2025 per cent, with the price up 9/32.
The dollar gained 0.88 per cent to 118.73 yen, while the dollar index, which measures the greenback against a basket of major currencies, gained 0.84 per cent to 88.340.
The euro fell 0.28 per cent to $1.2431.