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Oil's plunge sends US shares tumbing


MARKET CLOSE: Wall Street's energy sector slumped as oil futures fall below $US100 a barrel for the second time in a week.

Nevil Gibson
Thu, 12 May 2011

A plunge in US oil futures below $US100 a barrel for the second time in a week sent stocks tumbling on Wall Street.

Oil dropped sharply on a combination of weak demand and a spike in the US dollar as the euro fell 2USc. This followed a one-day anti-austerity strike in Greece and a new warning from Standard & Poor's about Portuguese banks.

In New York, energy shares were hardest hit, with Chevron and Exxon Mobil both falling 2.3% as crude-oil futures fell more than 5% on weaker-than-expected government inventory data.

At the close (8am NZ time), the Dow Jones Industrial Average was down 130.25 points, or 1.0%, to 12,630.11. The Nasdaq Composite declined 0.9% to 2845.06 while the S&P 500 index lost 1.1% to 1342.06.

Other markets: Europe, Asia mixed
European shares finished generally higher, buoyed by upbeat results from French luxury firm Hermès International and Danish shipper AP Moller-Maersk.

The Stoxx Europe 600 index added 0.3% to close at 283.73 but the UK FTSE 100 fell 0.7% to 5976.00, pulled down by a weaker outlook for UK growth, disappointment from heavyweight HSBC Holdings and a drop in metal prices.

France's CAC-40 index edged up 0.1% at 4058.08 and Germany's DAX eased 0.1% to 7495.05.

In Asia, Japanese stocks gained on a weaker yen and news of an earlier-than-expected restart at one of Renesas Electronics' chip-making plants.The Nikkei Stock Average rose 0.5% to 9864.26.

Shares slipped in Shanghai and Hong Kong as a batch of Chinese economic data suggested elevated inflation might lead to further tightening measures. The Shanghai Composite fell 0.2% to 28,83.42, while Hong Kong's Hang Seng Index retreated 0.2% to 23,291.80.

Australia's S&P/ASX 200 index advanced 1.2% to 4780.25 and Korea's Kospi gained 1.3% to 2166.63.

Commodities: Oil plunges, gold down
US gasoline futures plunged, triggering a temporary halt of energy trading on the New York Mercantile Exchange after an unexpected rise in US inventories.

The decline in gasoline pulled the broader energy market lower. Light, sweet crude for June delivery settled $US5.67, or 5.5%, to $US98.21 a barrel in New York.

Silver and gold extended losses after a sharp drop in energy futures sent traders scrambling to the sidelines.

The May gold contract settled down $US15.50, or 1%, at $US1501.10 an ounce. The silver contract for May delivery fell $US2.97, or 7.7%, to settle at $US35.509 an ounce.

Currencies: Euro slumps
The euro lost two full cents to the US dollar on sliding commodity prices and euro-zone sovereign-debt fears.

The fall took the euro below its 50-day moving average to a three-week low against the dollar and to its weakest levels against sterling since late March.

The drop was triggered when crude oil slid below $US100 per barrel in New York. The euro fell as low as $US1.4186, its weakest level since April 18, from $US1.44 late on Tuesday.

Against sterling, the euro hit its lowest level since March 24, at £0.8679 from £0.8807. The euro was also down more than 1% against the yen at ¥114.75 from ¥116.39.

Nevil Gibson
Thu, 12 May 2011
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Oil's plunge sends US shares tumbing
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