No let-up of oil low as global fears of recession haunt markets again

Amid mounting concerns about the risks of a global recession, European shares and oil headed lower again yesterday.

In the US, declines in banks and technology stocks have weighed on equities in the market’s latest rout, the worst for the Nasdaq Composite Index since August.

The gauge briefly rebounded yesterday after approaching a bear market, closing Monday down 18% since its record last July.

Equity markets are struggling to stabilise after the Nasdaq Composite Index’s worst two-day sell-off since August and an earlier drop yesterday brought it within 1% of a bear market.

“It’s quite a tussle between the bulls and bears,” said John Carey, a Boston-based fund manager at Pioneer Investment Management, which manages about $230bn.

“Some people think this is a temporary setback and the market maybe got a little ahead of itself — that nothing is really wrong with the economy and this is a good buying opportunity.

"Others think the market is indicating a slowdown in months ahead.”

Here, Bank of Ireland fell 2.75% to under 25 cent, near July 2014 closing levels.

A wide range of other shares in various industries — including CRH, Applegreen, and Dalata Hotel Group — also saw sharp falls.

Weaker mining and banking stocks kept Britain’s top share index mired near three-year lows as concern lingered about financials.

Signs of a global economic slowdown have hit world stock markets since the start of the year, and raised concerns about the stability of the European banking system. Heavyweight Barclays fell nearly 5% and HSBC fell 1.4%.

“There are worries about global growth, and fears of a recession are starting to emerge. The banks are getting hit hard,” said Berkeley Futures associate director Richard Griffiths.

Goldman Sachs analysts wrote that while there were no signs of any strain in terms of euro or US dollar funding in money markets, market liquidity had nevertheless reduced.

While the S&P 500’s valuation of 15.4 times the forecast earnings of its members is in line with the average of the past five years, the measure has plunged 13% since the start of the year and is at the lowest level since October 2014.

The gauge remains more expensive than developed markets in Europe, where the Stoxx 600 Index trades for 13.8 times estimated earnings.

That is down from a record valuation of 17.4 times notched in June.

A gauge of lenders in the S&P 500 has plunged more than 25% since a July peak to its lowest level since October 2013 as bearish sentiment intensified this month.

Ten of the 17 members of the S&P 500 Banks Index have lost at least 20% this year.

Amid growing concern over China, volatile oil prices and the trajectory of US interest rates, all 24 developed-market indexes worldwide are down in 2016.

Some strategists are losing their resolve in keeping bullish calls on the S&P 500, and have trimmed their year-end projections.

As global stocks near a bear market, volatility is on the rise.

The Chicago Board Options Exchange Volatility Index rose 6.21% yesterday to 27.62.

The measure of market turbulence known as the VIX jumped 20% over the prior three days to the highest in more than two weeks.

Oil prices will stay low for up to 10 years, world's largest energy trader says https://t.co/2Q9hAszIuF https://t.co/5hL808keA3

— Bloomberg (@business) February 8, 2016