December 21, 2018: Stocks mostly extended losses Friday and oil prices struck multi-month lows, with markets dragged down by political turbulence in Washington, renewed fears over US-China relations and economic growth strains.
“Stocks are in the red, with the risk of a US government shutdown taking the blame,” said Joshua Mahony, market analyst at IG trading group.
The prospect of an embarrassing Christmas time shutdown of the US government loomed as President Donald Trump and congressional Democrats remained far apart on a stopgap funding bill held up by discord over money for a wall on the Mexican border.
“A potential US government shutdown and US accusations of Chinese hacking fuelled existing market concerns about economic growth,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking.
Rising tensions between the world's two largest economies have also unnerved markets, with China hitting back at the US after the Justice Department indicted two alleged Chinese hackers accused of having ties to Beijing's security services.
US officials said the indictment showed President Xi Jinping had not fulfilled his pledge to stop cybercrime, but it drew a furious response from Beijing, which accused Washington of “fabricating facts”.
The row erupted as the two sides prepare for talks next month to resolve their trade conflict.
US stocks endured a torrid session Thursday, the latest losses in a bruising December that has set up Wall Street for its worst year since the 2007 financial crisis, with the Nasdaq now almost 20 percent off its 2018 peak.
Crude's latest falls added to anxiety on financial markets. New York-traded WTI slumped to $45.32 per barrel, the lowest level since July 2017.
Brent North Sea crude hit a September 2017 low at $52.92.
Analysts said OPEC moves to cut production would likely have little effect.
“There's nothing OPEC can do about that predicament,” Sam Margolin, a Wolfe Research LLC analyst, said.
“The solution lies only in market confidence around global growth, the US-China trade war, and the pace of Fed rate hikes.”
Elsewhere Friday, Japanese stocks again bore the brunt of Asian losses, with the Nikkei falling further into bear market territory to hit a fresh 15-month low and regional shares on course for the worst week since October.
Nissan shares slipped 2.04 percent after its former chairman Carlos Ghosn faced a fresh criminal allegation that could keep him in jail well into 2019.
– Key figures around 1130 GMT –
London – FTSE 100: DOWN 0.4 percent at 6,685.41 points
Frankfurt – DAX 30: DOWN 0.4 percent at 10,571.79
Paris – CAC 40: DOWN 0.7 percent at 4,660.53
EURO STOXX 50: DOWN 0.7 percent at 2,979.10
Tokyo – Nikkei 225: DOWN 1.1 percent at 20,166.19 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 25,753.42 (close)
Shanghai – Composite: DOWN 0.8 percent at 2,516.25 (close)
New York – Dow: DOWN 2.0 percent at 22,859.60 (close)
Euro/dollar: DOWN at $1.1426 from $1.1450 at 2200 GMT
Dollar/yen: DOWN at 111.14 yen from 111.24 yen
Pound/dollar: UP at $1.2672 from $1.2659
Oil – Brent Crude: DOWN 94 cents at $53.41 per barrel
Oil – West Texas Intermediate: DOWN 41 cents at $45.47