Oil prices, stock markets slide as dollar climbs higher

NEW YORK — Global equities sank deeper into the red on Friday following dour economic news from China while a slump in oil prices deepened.

US investor appetite was dampened by economic data that suggested the central bank may continue raising interest rates, further eroding gains from a relief rally after Tuesday's midterm elections.

Higher US energy stockpiles drove benchmark WTI crude to its longest losing streak in more than 30 years, with the tenth straight lower finish, while the dollar gained against the pound and the euro. 

In equities, Frankfurt was the lone standout posting gains, while London, New York, Paris, Tokyo and Shanghai all crumbled, but New York indices were still higher for the week.

Hong Kong lost 2.4 per cent on the day. 

Chinese wholesale inflation numbers released on Friday came in weaker than expected, possibly pointing to slackening demand, while auto sales were also lower.

Gregori Volokhine of Meeschaert Financial Services told AFP there were "clear signs" of slowing in the Chinese economy, amid the tariff battle between Washington and Beijing.

"But, while a trade war can be resolved through negotiation, an economic slowdown is a much more serious problem," he said.

"Slowing growth in China represents a risk for everyone."

Meanwhile, US wholesale inflation, also released on Friday, was hotter than forecast, diminishing chances the Federal Reserve (Fed) will slow the pace of interest rate increases.

David Madden, analyst at CMC Markets, told AFP that "rising US stockpiles, rising US production — which is now at a record-high — and talk of Iraq and Indonesia raising output next year are all factors as to why oil is lower. Ongoing concerns about China slowing down are a factor too".

Madden added that the "price needs to strike a balance, of being cheap enough to keep demand strong, and keep [US President Donald] Trump happy, but not so low that their oil revenue drops drastically".

Capital Economics meanwhile warned that as the global economy slows into 2019 the US market would take a buffeting.

"We think that the global economy will slow next year," said the consultancy, which forecast the US stock market "will fall by nearly 15 per cent in 2019". 

Shares in European energy companies tanked as oil slid back. BP shed 2 per cent, Shell gave up 1 per cent and Total lost 2.5 per cent. But US firms Exxon Mobil and Chevron were little changed.

Stock markets had enjoyed a midweek rally after traders bet that expected gridlock on Capitol Hill would prevent Congress from enacting policies that could encroach on Trump's business-friendly agenda.

But markets began to sag again on Thursday after the Fed said it expected further "gradual" interest rate increases.