Global stock market sell-off resumes as Saudi sanction fears push oil higher

  • Global stock markets continued to fall Monday in a strong risk-off environment.
  • Asian stock indexes lost as much as 1.9% in Monday’s session, while most European stocks nursed small falls during morning trade.
  • US futures pointed to a continuing slump in US markets, with the Nasdaq set to start the week 0.8% lower.
  • Elsewhere, Saudi Arabia’s stock market has rebounded after a major fall Sunday following the threat of US sanctions over the disappearance of a Saudi journalist.

Asian markets resumed their slump Monday with most major indexes across the continent losing more than 1% of their value, bringing back concerns of a global market correction following several days of losses last week.

After a week of falling stocks, global markets paused Friday, with Asia, Europe, and the US seeing significant rebounds in prices. The slump, however, seemed to resume in Asia on Monday.

The Shanghai Composite, China’s most important mainland share index, dropped 1.5%, while Japan’s Nikkei 225 lost 1.9% as the risk-off environment that permeated markets last week returned.

At the same time, futures markets pointed to another drop in all three major US indexes. The Nasdaq looks to be the biggest faller, with futures suggesting a fall of about 0.8% when the market opens.

“Just as you shouldn’t breathe too big a sigh of relief after earth tremors end, we remain anxious of a market that seems jittery,” analysts at the Dutch lender ING said on Monday morning.

European stock indexes also saw losses in the first hour of trade on Monday morning, though their falls were minor and by late morning had mostly evaporated. By 11:30 a.m. BST (6:30 a.m. ET) Germany’s DAX was up 0.18%, while the FTSE 100 in London had trimmed 0.04% from its closing price on Friday. The Euro Stoxx 50 broad index of the continent’s biggest companies was flat.

Saudi fears

Saudi Arabia’s main stock market, the Tadawul, rebounded by almost 2% on Monday following a major slump during Sunday’s trading session.

During an interview with the TV news show “60 Minutes,” President Donald Trump threatened “severe punishment” against Saudi Arabia if it was found to be involved in the disappearance of the journalist Jamal Khashoggi in Istanbul earlier this month. Turkish officials believe he may have been murdered by Saudi agents, an allegation denied by Saudi Arabia.

Trump’s words seemed to spook investors, with the index falling by as much as 7% at one point. On Monday, it had bounced 1.8% to trade at 7,397 points.

Trump’s threats also preceded an increase in the price of oil, reflecting concerns that US sanctions against Saudi Arabia could further threaten supply. Brent crude, the international benchmark, was 1% higher at $US81.30 a barrel on Monday morning.

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