Global stock markets slide, oil falls below $30 a barrel

Traders work on the floor of the New York Stock Exchange (NYSE) on January 13, 2016 in New York City.

The U.S. Commerce Department said retail sales fell 0.1% in December from the previous month.

USA crude oil traded about 5 percent lower ahead of the US market open, below $30 a barrel to hit its lowest in more than 12 years.

The Dow Jones industrial average closed up 227.64 points, or 1.41 per cent, to 16,379.05, the S&P 500 gained 31.56 points, or 1.67 per cent, to 1,921.84 and the Nasdaq Composite ended up 88.94 points, or 1.97 per cent, to 4,615.00.

For the week, the Dow fell 2.2 percent, the S&P 500 lost 2.2 percent and the Nasdaq dropped 3.3 percent. The Producer Price Index fell 0.2 percent in December after increasing 0.3% in November. Germany’s DAX lost 2.5 per cent, while France’s CAC 40 dropped 2.4 per cent. Britain’s FTSE 100 dropped 1.9 per cent.

In China, the central bank injected US$15mln of liquidity into the market via a medium-term lending facility.

The painful return of big price swings serves as a reminder that investing in stocks can be harrowing, especially if investors focus on the day-to-day moves. The VIX is based on prices of S&P 500 options that investors tend to rush to when they are fearful of stock declines.

The Dow dropped over 400 points shortly after Friday’s opening bell, leaving it on track for the worst day of what has already been a awful 2016.

Citigroup was down 6.5 per cent at $42.44, while Wells Fargo fell 3.2 per cent to $49.04, after reporting largely in-line quarterly earnings.

About 10.8 billion shares changed hands on US exchanges, well above the 7.6 billion daily average for the past 20 trading days, according to Thomson Reuters data. The S&P also fell, dropping 0.53 percent to 1,880.25.

Concerns about China, the world’s second largest economy, its weakening currency and turmoil in its stock markets have kept investors away shy of risky assets in what has been a highly volatile start to the year.

The cost of being a bull on New Year’s has never been higher.

There’s been another dive on Wall Street. CSX was down 5.7 per cent at $22.35 after the railroad reported a lower quarterly net profit, and said the weak global economy and USA industrial markets would weigh on results.

Market analysts said a rebound was bound to happen eventually as pessimism about stocks got too extreme.

The S&P 500 posted 1 new 52-week high and 115 new lows; the Nasdaq recorded 6 new highs and 439 new lows.

The University of Michigan’s preliminary consumer sentiment index, due at 9:55am, is expected to rise in January.

The Shanghai Composite Index tumbled into bear-market territory, having lost 20% from a high in late December, following a state-run media report that some Chinese banks were no longer accepting stocks as collateral for loans. US energy companies have suffered as the Middle East continues to flood the world with cheap oil, raising questions about their ability to repay their debt. The CBOE volatility index jumped as much as 29.2 per cent to 30.95, it’s highest since September. On Friday the 10-year Treasury yield briefly slipped below the 2% level for the first time since October. The price of oil fell. Brent crude, a benchmark for global oils, fell 21 cents to $30.67 per barrel in London. The euro rose to $1.0952 from $1.0862, while the dollar fell to 116.81 yen from 118.15 yen.