The US Federal Reserve is expected to raise the benchmark interest rate in December, but plans for 2019 are unclear
New York (AFP) - A global stocks rally faded on Thursday as the European Union warned of slowing growth and Wall Street pulled back from a post-election bounce.
Meanwhile, fears of higher oil supply sent prices into a bear market, or a 20 percent decline from last month’s high, which weighed on oil-related stocks.
The dollar strengthened against major rivals after Wednesday’s selloff in the wake of the key US midterm elections.
London outperformed on hopes that a Brexit deal would soon be announced, dealers said. But Paris and Frankfurt fell.
Wall Street also ended mostly lower as investors lost the head of steam from Wednesday’s post-election rally, when a split decision in the US vote reassured markets that Congress was unlikely to infringe on the business environment.
“A lot of traders have taken a step back following the post-election surge,” said Ken Berman of Gorilla Trades.
Art Hogan of B Riley FBR told AFP investors might have been disappointed the Fed’s commentary had still pointed to further “gradual” interest rate hikes.
- EU growth ‘disappointment’-
The EU raised red flags on growth prospects
In Europe meanwhile, the EU on Thursday said growth in the eurozone would slow in 2019 and beyond, citing global uncertainty and heightened trade tensions.
The European Commission also warned that Italy’s deficit would balloon in 2019, owing to a spending boost planned by Rome’s populist government that blatantly defies the EU expenditure rules.
Analysts at Capital Economics called the eurozone’s growth slowdown “a major disappointment,” although they said growth could pick up again over coming quarters.
Elsewhere, oil prices fell – with WTI crude closing lower for the ninth session in a row – after data showing a surge in US energy stockpiles, although there was some support from reports OPEC could reduce output next year.
The cartel had started opening the taps again this year after the end of a long-running cap agreement with Russia, which boosted prices.
But with production now rising globally again – and Iran sanctions seemingly having little impact owing to US waivers – Bloomberg News said ministers meeting in Abu Dhabi this weekend were considering a reduction.
“Saudi Arabia and Russia have increased production, and prices have come down $15 a barrel,” Hossein Kazempour Ardebili, Iran’s representative to the OPEC, was quoted as saying.
“They have over-balanced the market” and have no choice but to cut about one million barrels a day.
- Key figures around 2200 GMT -
Oil - Brent Crude: DOWN $1.42 at $70.65 per barrel
Oil - West Texas Intermediate: DOWN $1 cents at $60.67 per barrel
New York - Dow: FLAT at 26,191.22 (close)
New York - S&P 500: DOWN 0.3 percent at 2,806.83 (close)
New York - Nasdaq: DOWN 0.5 percent at 7,530.88 (close)
London - FTSE 100: UP 0.3 percent at 7,140.68 points (close)
Frankfurt - DAX 30: DOWN 0.5 percent at 11,527.32 (close)
Paris - CAC 40: DOWN 0.1 percent at 5,131.45 (close)
EURO STOXX 50: DOWN 0.3 percent at 3,237.60 (close)
Tokyo - Nikkei 225: UP 1.8 percent at 22,486.92 (close)
Hong Kong - Hang Seng: UP 0.3 percent at 26,227.72 (close)
Shanghai - Composite: DOWN 0.2 percent at 2,635.63 (close)
Euro/dollar: DOWN at $1.1364 from $1.1434 at 2200 GMT
Pound/dollar: DOWN at $1.3063 from $1.3130
Dollar/yen: UP at 114.07 yen from 113.53 yen