Oil's plunge knocks wind out of Wall Street

An oil pumpjack
An oil pumpjack

New York - Plunging oil prices and a weakened Boeing knocked the wind of out Wall Street on Tuesday, ending hopes of a quick rebound from Monday's sell-off.

Elsewhere, global equities markets offered a mixed picture but were mostly higher despite headwinds from Brexit talks and Italy's budget talks.

London underperformed after the European Union published contingency plans for a "no-deal" Brexit. A deal was announced just after the closing bell on a "technical level" and was to go before the British Cabinet on Wednesday.

Frankfurt and Paris both forged higher.

But in New York, West Texas Intermediate benchmark crude oil swung to a record 12th straight negative finish in its biggest drop since 2015, weighing on supermajors Chevron and Exxon Mobil and dragging the Dow Jones Industrial Average lower.

OPEC on Tuesday trimmed its global oil demand growth forecasts for this year and next, as kingpin Saudi Arabia tries to cut output to bolster prices in a weakening market.

The S&P likewise sank while the tech-heavy Nasdaq slid.

Wall Street had suffered a rout on Monday as fears of declining demand in the tech sector spread to the whole of the market.

Meanwhile, Boeing gave up 2.1%, extending losses following a Wall Street Journal report that it had allegedly withheld information tied to a flight control feature involved in a fatal crash.

Also on Tuesday, a top White House aide confirmed that on Tuesday President Donald Trump and Chinese President Xi Jinping will discuss the deteriorating trade relations on the sidelines of the Group of 20 summit later this month.

"There is a number of issues hovering over the market: questions regarding global growth, the China-US trade talks and also the US dollar's strength," Quincy Krosby of Prudential Financial told AFP.

She said investors were unnerved by the prospect of continuing interest rate hikes, with the Federal Reserve likely to raise lending rates again next month, which they fear could weaken consumer demand.

"People are looking at the housing market, the vehicle sales and saying, 'the economy can't handle it,'" Krosby said.

'On edge' over Italy

In foreign exchange, the euro recovered from a 17-month low of $1.1216 seen at the start of the week.

Earlier in Asia, shares in technology firms slid, tracking Monday's a deep sell-off in New York, while energy firms also fell with oil prices.

Back in Europe, Britain reported a pick-up in wage growth, boosting the pound and offsetting news of a slight increase in unemployment.

Italy's populist government was set on Tuesday to defy the European Commission, preferring to risk financial sanctions than revise a big-spending budget, and putting stock traders "on edge," said David Madden, market analyst at CMC Markets UK.

The coalition had been given time to change its 2019 plans but insists an anti-austerity approach will help kick-start growth in the eurozone's third largest economy, and consequently reduce the public debt and deficit.

But Brussels forecasts Italy's deficit will reach 2.9% of GDP in 2019 and hit 3.1% in 2020 - breaching the EU's 3.0% limit.

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