Global stock market sell-off resumes as Saudi sanction fears push oil higher

REUTERS/Toru Hanai

• Global stock markets continue to fall as risk-off environment remains strong.
• Asian stock indexes lost as much as 1.9% in Monday's session, while European stocks nursed small falls in the first hours of trade.
• US futures also point to a continuing slump in the US markets, with the Nasdaq set to start the week almost 1% lower.
• Elsewhere, Saudi Arabia's stock market has rebounded after a major fall on Sunday following the threat of US sanctions over the disappearance of a prominent journalist and critic of Riyadh.

Asian markets resumed their slump on Monday, with most major indexes across the continent losing more than 1% of their value during the first session of the week, and bringing back concerns of a global market correction following several days of losses last week.

After almost a solid week of falling stocks, global markets paused on Friday, with Asia, Europe, and the US seeing a significant rebound in prices. The slump, however, looks to have resumed in Asia on Monday.

The Shanghai Composite, China's most important mainland share index, dropped 1.5% on Monday, while Japan's Nikkei 225 lost 1.9% as the risk-off environment that permeated markets last week returned.

As well as losses in Asia, futures markets are pointing to another drop in all three major US indexes when trading begins at 2.30 p.m. BST (9.30 a.m. ET). The Nasdaq looks to be the biggest faller, with futures suggesting a fall of about 1% at the open.

"Just as you shouldn't breathe too big a sigh of relief after earth tremors end, we remain anxious of a market that seems jittery," analysts at Dutch lender ING said on Monday morning.

European stock indexes also saw losses in the first hour of trade on Monday morning, although their falls were minor. By 9.15 a.m. BST (4.15 a.m. ET) Germany's DAX was down just 0.4%, while the FTSE 100 in London had trimmed 0.2% from its closing price on Friday. The Euro Stoxx 50 broad index of the continent's biggest companies lost 0.3%.

Saudi fears

Elsewhere, Saudi Arabia's main stock market, the Taddawul, rebounded by almost 2% on Monday, following a major slump during Sunday's trading session, driven by fears that US President Donald Trump may move to impose sanctions on the Kingdom. This would be in response to the disappearance of journalist Jamal Khashoggi in the Turkish capital Istanbul last week. Turkish officials believe he may have been murdered by Saudi agents.

Trump threatened "severe punishment" against Saudi Arabia if it is found to be involved in Khashoggi's disappearance, which spooked investors, causing the index to fall as much as 7% at one point on Sunday.

On Monday, it has bounced 1.8% to trade at 7,397 points.

Trump's threats have also driven the price of oil higher, reflecting concerns that US sanctions against Saudi Arabia could further threaten supply. Brent crude, the international benchmark, is 0.7% at $80.95 per barrel on Monday morning.

Get the latest Oil WTI price here.