While you were sleeping: OPEC sinks oil, Wall St falls

Wall Street dropped along with the price of oil as Opec decided to keep its output at current elevated levels, fuelling concern about the increasing global glut.

"We're plunging with the dawn of an Opec without quotas," New York-based hedge fund Again Capital partner John Kilduff told Bloomberg.

"The Saudis doubled down on their strategy of driving out higher-cost producers. They are prepared to play a long game to return to dominance."

At the Wall Street close, the Dow Jones Industrial Average was down 117.12 points, or 0.7%, to 17,730.51. The Standard & Poor's 500 Index dropped 0.7% to 2077.07, while the Nasdaq Composite Index slipped 0.8% to 5101.81.

A drop in energy shares of Chevron and those of Exxon Mobil, last trading 3.2% and 3% lower respectively, led the weakening in the Dow.

Brent crude fell to $US41.38 and US crude weakened to $US37.65 a barrel. And there may be worse ahead.

"It means there is a loss of confidence in the market after Opec and people expect low prices to last longer," Singapore-based Strong Petroleum managing director of crude oil Oystein Berentsen told Reuters.

"Hence the back of the curve will be under pressure from producer hedging via selling the back of the curve to limit loss or lock in a small profit to reduce risk."

Compounding the decline in oil and other commodities was the rising US dollar amid a widely expected Federal Reserve interest rate increase next week.

"The Fed is pretty locked in regarding a hike next week and any fall in commodity prices will be seen as transitory factors," Art Hogan, chief market strategist at Wunderlich Securities in New York, told Reuters.

Caught in the fray and concern about weakening demand from China was iron ore.

Iron ore hits new low
Ore with 62% content delivered to Qingdao shed 2.4% to $US39.06 a dry ton, a record low in daily prices compiled by Metal Bulletin dating back to May 2009.

Bucking the trend, shares of Keurig Green Mountain soared 73%, after the company said it agreed to be bought by an investor group led by JAB Holding for about $US13.9 billion in cash.

"The 78% premium should keep other bidders at bay," SunTrust Robinson Humphrey analyst William Chappell wrote in a client note.

In Europe, the mood was brighter too. The Stoxx 600 Index ended the session with a 1.1% increase from the previous close. France's CAC 40 Index rose 0.9%, while Germany's DAX Index climbed 1.3%.

Eurozone equities recovered some of last week's losses following a smaller than expected boost of monetary stimulus from the European Central Bank, as investors reassessed the additional measures.

"It's a rebound – everybody thought the news from the ECB was disappointing. The markets expected much more but the reaction was overdone," Frankfurt-based Quoniam Asset Management associate director for equities trading Soeren Steinert told Bloomberg. "The market seems to be fine now."

The UK's FTSE 100 Index slipped 0.2%.

UPDATED for Wall St close at 10am NZ time

(BusinessDesk)