Stock market news: Sell-off resumes as Saudi sanction fears push oil higher

REUTERS/Toru Hanai

• Global stock markets continue to fall as risk-off
  environment remains strong.
• Asian stock indexes lost as much as 1.9% in Monday’s
  session, while European stocks nursed small falls in the first
  hours of trade.
• US futures also point to a continuing slump in the US
  markets, with the Nasdaq set to start the week almost 1%
  lower.
• Elsewhere, Saudi Arabia’s stock market has rebounded
  after a major fall on Sunday following the threat of US
  sanctions over the disappearance of a prominent journalist and
  critic of Riyadh.

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

After almost a solid week of falling stocks,
global markets paused on Friday, with Asia, Europe, and the
US seeing a significant rebound in prices. The slump, however,
looks to have resumed in Asia on Monday.

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

As well as losses in Asia, futures markets are pointing to
another drop in all three major US indexes when trading begins at
2.30 p.m. BST (9.30 a.m. ET). The Nasdaq looks to be the biggest
faller, with futures suggesting a fall of about 1% at the open.

“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 Dutch lender ING said on Monday
morning.

European stock indexes also saw losses in the first hour of
trade on Monday morning, although their falls were minor. By 9.15
a.m. BST (4.15 a.m. ET) Germany’s DAX was down just 0.4%, while
the FTSE 100 in London had trimmed 0.2% from its closing price on
Friday. The Euro Stoxx 50 broad index of the continent’s biggest
companies lost 0.3%.

Saudi fears

Elsewhere, Saudi Arabia’s main stock market, the Taddawul,
rebounded by almost 2% on Monday, following
a major slump during Sunday’s trading session, driven by
fears that US President Donald Trump may move to impose sanctions
on the Kingdom. This would be in response to the disappearance of
journalist Jamal Khashoggi in the Turkish capital Istanbul last
week. Turkish officials believe he may have been
murdered by Saudi agents.

Trump threatened “severe punishment” against Saudi
Arabia if it is found to be involved in Khashoggi’s
disappearance, which spooked investors, causing the index to fall
as much as 7% at one point on Sunday.

On Monday, it has bounced 1.8% to trade at 7,397
points.

Trump’s threats have also driven the
price of oil higher, reflecting concerns that US sanctions
against Saudi Arabia could further threaten supply. Brent
crude, the international benchmark, is 0.7% at $80.95 per
barrel on Monday morning.

Get the latest Oil WTI price here.