Summary Fears that the now-45 percent crash in crude prices could do more harm to many countries.
NEW YORK, (AFP) - Crashing oil prices dragged US stocks to one of their worst losses of the year Friday, completing a global rout of equity markets after what has been for many a banner year.
Fears that the now-45 percent crash in crude prices could do more harm to many countries, companies and banks than it does help to consumers drove the fall in stocks, on top of the impact it has had on oil industry shares.
On Wall Street, the Dow Jones Industrial Average fell 1.79 percent and the S&P 500 tumbled 1.62 percent. It was the S&P 500 s first weekly loss in nearly two months and its worst single-week decline -- 3.5 percent -- since May 2012.
Likewise in Europe, London s benchmark FTSE 100 index slumped 2.49 percent, France s CAC 40 lost 2.77 percent, and Frankfurt s DAX 30 dropped 2.72 percent.
Elsewhere, Bombay stocks lost 0.91 percent, Brazil 3.73 percent, and Hong Kong 0.27 percent, while the earliest to open, Tokyo, brooked the trend with a 0.66 percent gain.
Analysts blamed some selling on political turmoil in Greece, still-slowing growth in Europe, and some trimming of the market froth of recent weeks -- both the Dow and S&P 500 ended last week at records.
"It was a bad week, but similar to other upswings this year, the decline after several highs was moderate and controlled," said Howard Silverblatt, and analyst at S&P.
"The question, however, remained the same as it was before - is that it?" he said.
Five-year low
But market analysts said the plunge in oil prices was the main catalyst in Friday s market routs, and said that was not likely "it" for the crude trade.
Oil prices fell more than three percent on Friday alone, to their lowest levels since the first half of 2009 after the Paris-based International Energy Agency slashed its 2015 global demand outlook.
Demand is now expected to grow less than one percent next year, well below the pace of the increase in supplies.
In reaction the New York price of the US benchmark WTI crude sank $2.14 to $57.81 a barrel, while in London Brent crude lost $1.92 to $61.76.
"Oil markets look set to end 2014 on a sour note and the prospects for early-2015 look even worse," JPMorgan said Friday in a market analysis.
If the OPEC cartel, which controls nearly one-third of global output, does not come to a deal on reducing output, it said, "then crude markets have substantial further downside from current levels and prices will be lower for longer than we currently envisage."
The steepness of that fall has hit shares of the oil industry hard, with exploration and production companies expecting sharp downturns in sales and announcing investment cutbacks, which hit in turn the business of oilfield service companies.
But the worries are that the sheer steepness of oil s fall will spill over into other markets and especially the financial industry, where energy derivatives are heavily traded. Some worry major hedge funds could be hit.
"Investors are watching oil and they don t know what to make of it," said Jack Ablin, chief investment officer at BMO Private Bank.
"There s a cloud hanging over the market," he added.
But Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said the fears were overblown.
"It is preposterous to think that lower oil prices are a negative," he said.
