Crude futures prices plunged again Friday, with London’s Brent contract dropping 4.5 percent to $37.93 a barrel and New York’s WTI fix losing 3.1 percent to $35.62 a barrel.
That spurred more selling of shares connected to the oil patch — exploration houses, service firms, pipeline operators and the rest — pulling down markets from Asia to the Americas.
In New York, the S&P 500 fell 1.9 percent. London’s FTSE 100 lost 2.2 percent, the Dax lost 2.4 percent in Frankfurt, Hong Kong fell 1.1 percent and Shanghai 0.6 percent.
Only Tokyo among major bourses avoided the harsh selloff, ending a three-day losing streak with a 1.0 percent rise as a weaker yen supported exporters.
Oil’s losses mounted to around 12 percent for the week after the International Energy Agency warned that global inventories “are set to keep building at least until late 2016.”
Adding to that was another fall in China’s yuan, taking its loss against the dollar to one percent this week as Beijing wrestles with a continued outflow of capital on its slowing economy.
Late Friday in Beijing, the People’s Bank of China indicated that it would soon begin to weigh the yuan, or renminbi, against a basket of currencies instead of pegging it to the dollar.
“The bilateral renminbi-US dollar exchange rate is not considered a good indicator of the international parity of tradable goods,” the bank said in a note on its website.
Analysts said that stirred more instability in secondary currencies.
“Following the shock devaluation back in August, China’s interventions are continuing to cause FX market instability,” said Nawaz Ali, at Western Union Business Solutions.
Gregori Volokhine of Meeschaert Financial Services said “the energy market is down, the commodities market is down, and the yuan is falling much more than expected.”
“All of this is creating more deflationary pressure,” he added.
Traders were also positioning themselves before next Wednesday’s expected interest rate hike, the first in nine years, from the US Federal Reserve.
The stock selloff was much broader than oil firms, hitting a wide range of shares, with banks taking a heavy hit.
The newest mega-merger, between venerable US industrial heavyweights Dow Chemical and DuPont failed to boost their shares. The all shares-based tieup will create the world’s largest chemicals group, DowDuPont, valued at $130 billion and surpassing Germany’s BASF in sales.
Despite analysts’ praise for the deal, shares of both fell: Dow Chemical ended 2.8 percent lower and Dow member DuPont gave up 5.5 percent.
In London, Old Mutual insurance and banking firm slumped 10.62 percent to 155.70 pence with its close exposure to South Africa, where the surprise removal this week of Nhlanhla Nene as finance minister caused consternation.
French automaker Renault lost 5.3 percent despite saying it had reached an agreement with its alliance partner Nissan and the Paris government to defuse tensions sparked by France raising its stake in the automaker.
Among tech shares, US-traded Alibaba lost 5.4 percent after announcing it would buy Hong Kong’s leading English-language newspaper.