Unstoppable slide in price of oil sends share prices plunging across the globe

Stock markets worldwide have tumbled amid growing fears over the state of the world economy caused by the seemingly unstoppable slide in oil prices. Britain’s FTSE 100, Germany’s Dax and the Cac 40 in Paris were all down by about 3%, wiping out Tuesday’s gains. The falls followed similar sharp drops in stocks in Asia and elsewhere. In Japan, shares tumbled to their lowest since October 2014 and in Dubai they closed at a 28-month low. "The real fear in the market is that the oil price isn’t showing any signs of recovery whatsoever,“ said David Madden, a market analyst at IG in London.

Investors have decided the world is a riskier place

Laura Lambie, Investec Wealth Investment.

Share falls are being sparked by a dive in oil prices, which in early trading on Wednesday fell by 4% to a 12-year low. They later recovered slightly but the drop, caused by a global glut of supplies as China’s economy falters and US producers flood the market, spooked investors who fear another global recession. Among the casualties is Anglo-Dutch group Shell, which said its profits would a tenth of what they were in 2014. It is slashing thousands of jobs, selling assets worth billions of dollars and pulling out of major projects. World stocks are now at their lowest levels since 2013 with analysts saying they see no end in sight to the turmoil.

The rate at which China is slowing down is effectively scaring traders in the West. The concern is that China’s economy is so large that it could end up dragging the rest of the world down with it.

Analyst David Madden

Business shares fall