Equities slide on oil, US rates outlook

wall-streetNEW YORK: European and US stocks slid lower Tuesday as oil prices slumped on a gloomy forecast for crude demand and investors contemplated the US interest rate outlook.

Petroleum producers including France’s Total and US giant Chevron fell more than two percent after the International Energy Agency warned that the global oil supply glut would last into next year instead of ending this year as it previously thought.

The IEA trimmed its demand forecast, pointing to weak consumption in China and India.

Sentiment was also dented by uncertainty over US monetary policy following contradictory signals from US Federal Reserve officials in the last couple of days as to the likelihood of an imminent interest rate hike.

“It’s been a yo-yo the last few days,” said Bill Lynch, director of investments at Hinsdale Associates.

“We’re going to be in a period between now and the Fed’s meeting next week where there could be increased volatility.”

Investors are not sure what to make of pullbacks in the market, said analyst Jasper Lawler at CMC Markets.

“The sudden burst of volatility in the previous two days saw investors pause on Tuesday to decide whether it’s a buying opportunity or a sign of more pain to come,” Lawler added.

German investor sentiment remained unchanged in September from its slightly positive level in August, disappointing analyst expectations, the ZEW economic institute said.

Britain’s annual inflation rate meanwhile held steady last month, giving little indication that the post-Brexit vote collapse in the pound had lifted prices, at least in the immediate aftermath of the referendum.

London’s FTSE 100 index closed 0.5 percent lower, while the DAX 30 in Frankfurt shed 0.4 percent and in Paris the CAC 40 fell 1.2 percent.

The losses were more significant on Wall Street, where the broad-based S&P 500 lost 1.5 percent.

Wells Fargo slumps

Wells Fargo sank 3.8 percent after Treasury Secretary Jacob Lew blasted the bank over its bogus accounts scandal. Wells Fargo said it would eliminate product sales goals for retail banking after it was fined $185 million by regulators.

Apple was the lone member of the Dow to gain, rising 2.6 percent after Sprint and T-Mobile reported strong orders for the new iPhone 7. The phones will be delivered beginning Friday.

In Seoul, shares of South Korean giant Samsung Electronics advanced 4.2 percent following news it reached a deal to sell its printing business to HP Inc. for $1.05 billion.

The company plunged more than 10 percent on Friday and Monday after it urged global consumers to stop using its flagship Galaxy Note 7 owing to a spate of exploding batteries.