European Markets Drop 2% on China Worries and Plummeting Oil Price

Lucy Stoeva
15 Jan, 2016
New York City

European stock markets extended losses as oil prices tanked below $30 a barrel and the outlook on China remained pessimistic. BHP Billiton wrote down $7.2 billion in U.S. shale assets. Renault confirmed French investigation for emissions fraud. H&M posted better-than-expected December sales.

[R]4:00 PM Frankfurt – European stock markets extended losses as oil prices tanked below $30 a barrel and the outlook on China remained pessimistic. BHP Billiton wrote down $7.2 billion in U.S. shale assets. Renault confirmed French investigation for emissions fraud. H&M posted better-than-expected December sales.[/R]

European stocks plunged deeper Friday, led by energy companies, as oil prices dropped below $30 a barrel as Iran readies to add more crude oil supply in the rising glut in the world market.

Brent crude oil dipped 4% to $29.64 a barrel and is headed towards a weekly loss of more than 10%.

Oil prices in Europe declined after a brief rebound in yesterday’s session after International Atomic Energy is expected to lift most of the sanctions on Iran as early as today.

The lifting of sanctions will allow Iran to sell more oil in world markets and only increase the glut of crude oil.

Among oil producers, Tullow Oil in the U.K. slumped 6.1%. Repsol in Spain dropped 3.8%, and Galp Energia in Portugal plummeted 3.5%.

The Chinese stock market didn’t provide any comfort for investors as the Shanghai Composite Index fell 3.55%.

Auto sales in the European Union soared 16.6% in December, the strongest monthly rate in 2015, according the European Automobile Manufacturers’ Association.

In 2015, new automobile registrations in Europe increased 9.3%, to 13.7 million vehicles.

In London, FTSE 100 index lost 112.05, or 1.89%, to 5,806.18 and in Germany, the DAX index declined 248.91, or 2.54%, to 9.545.29.

In Paris, the CAC 40 index fell 104.07, or 2.41%, to 4,208.82.

Stock markets in Spain, Sweden, and Switzerland also suffered losses between 2% to 3%.

BHP Billiton Plc dropped 6.8% to 612.3 pence after the giant mining company said it would write down the value of its U.S. onshore energy assets, or $7.2 billion and the company blamed the sharp correction in oil prices.

The move enhanced investors’ concerns that the company may have to cut its dividend for the first time in more than 20 years.

Renault SA extended Thursday’s losses and tumbled 4.6% to €74.2 after the French auto maker confirmed that investigators had searched three Renault sites in relation with emission-related fraud.

Hennes & Mauritz AB jumped 1.1% to 278 Swedish kronor after the apparel retailer H&M, posted better-than-expected December sales, despite the warm weather conditions affecting winter apparel sales for other retailers.

December revenue in local currencies, including value-added tax, was 10% higher compared to the same month a year ago.

Carrefour SA shed 2.1% to €24.44 after the French supermarket retailer said revenue growth slowed down in the fourth quarter of 2015 due to the terrorist attacks in Paris and the unusually warm weather.

Europe's largest retailer reported fourth-quarter sales of €22.43 billion, an increase of 2.4% year-on-year, excluding currency and calendar effects.

In the previous quarter, Carrefour sales increased 4.2% from a year ago period.