World stocks hurt by 135-dollar oil

May 22 11:20 AM US/Eastern

Stock markets around the world mostly slid on Thursday, weighed down by record-high oil prices that stoke inflation and bite into earnings, analysts said.
Hong Kong shares closed down 1.64 percent after Wall Street wilted overnight. Europe's main stock markets mainly fell as the price of crude soared above 135 dollars for the first time on Thursday.

"We're seeing a flight to defensives (such as utilities and pharmaceuticals) amid oil price, dollar and general economic concerns," said a saleswoman at a European brokerage who requested anonymity.

In Asia, Chinese share prices ended 1.65 percent in negative territory, Singapore shed 1.1 percent and South Korea lost 0.7 percent.

But Japanese shares recovered to close modestly higher, while Taiwan and Australia ended flat.

"If commodity prices continue to rise and oil prices stay high, it's difficult for Asian markets to make progress," Pierre Gave, the head of research at financial consultancy GaveKal told AFP.

"The big weight on Asian markets at the moment is the problem of inflation," said Hong Kong-based Gave. "We've seen a big outflow of capital from Asia over the last month and a half."

In Europe, Frankfurt's main index shed 0.51 percent, Paris slid 0.33 percent, while London gained 0.24 percent approaching the half-way stage.

"If it weren't for the miners and telecoms, I don't think we'd be seeing these slight gains" in London, said Mic Mills from tradindex.com.

Investors fear surging fuel and food costs will bleed cash from consumers' wallets and force some countries to hike interest rates in a bid to tame inflation by slowing economic growth.

They also worry about the wider impact of the ailing US economy, which is battling a slowdown after a house price downturn and default crisis among subprime -- or riskier -- mortgages.

On Wall Street the Dow Jones Industrial Average plummeted 1.77 percent Wednesday because of the feverish rise of black gold, with the US central bank cutting its 2008 economic growth forecast to 0.3-1.2 percent from 1.3-2.0 percent, citing oil prices as a factor.

Oil continued its astonishing rise Thursday, reaching a record-high 135.14 dollars a barrel in London after unexpected drops in US crude and gasoline stocks.

"The mood is so negative," said Prayoga Triyono, a fund manager at Henan Putirai in Jakarta. "(The) oil price does scare away investors although at some point it may boost interest in energy stocks."

The subprime crisis has meanwhile inflicted huge financial losses at a slew of international banks and led to a global credit crunch, with the US expected to drag world growth lower.

Oil's latest price surge comes as the US Federal Reserve slashed its 2008 growth forecast for the US economy, the world's biggest oil consumer .

The Fed on Wednesday cut its 2008 economic growth forecasts to a range of 0.3 to 1.2 percent, from its prior forecast of 1.3 to 2.0 percent in January. In foreign exchange trade, the dollar recovered against the euro and yen on Thursday after the Fed also signalled an end to its rate-cutting policy.

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The privilege of the writ of habeas corpus shall not be suspended, unless when in cases of rebellion or invasion the public safety may require it. United State Constitution, Art. I Sec. 9 Par. 2

"Dissent is the Highest form of Patriotism" -- Howard Zinn

The real crux of the economic woes is this: Rich VS poor. The rich could care less what oil costs, or gasoline costs. The poor can hardly afford a car and insurance, let alone 4-10 dollars a gallon fuel. When most people don't have jobs due to economic squeezing by the elites, maybe then the revolution can began. This economy is actually starting to have an effect on my financial status, (I'm Poor), but I doubt the rich will notice much. Revoke the Bush tax cuts and lets get this economy back on track.

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

The US economy is in for a world of hurt. You can commit war crimes, let a city die and destroy the environment, but when the SUV'ers can't afford to barrel to their $9/hr jobs at 75 MPH- there will be hell to pay. Since all attempts to prepare for this crisis have been squelched, the shock is going to be severe. Food prices are already exploding due to the fuel costs, but wages have been stagnant or declining for the past 8 years. It doesn't bode well for Sidney McSame.

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"Seek above all for a game worth playing. Such is the advice of the oracle to modern man."- Robert S. DeRopp- The Master Game.

We need to pump the US dry and let countries like saudi arabia sit around moping wishing we would buy all their oil. With cheap oil from south america and canada and our own supply increase we should be ok for now....eventually were still going to run out of oil. We as americans need to put an end to these uncalled for wars that cost 900 billion a year and divert funds into building power stations that dont use fossil fuels. with that budget we can do and make anything we want were americans damnit.

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Hate to ask you this Med, but do poor people own rental property?

Was it something I said?

yep our economy is a joke and china is laughing all the way to the bank lets all thank our president and our congress for such a fine job now lets take the economy to further extremes and elect Obama or Clinton or hell even that old douchebag McCain. i'm sure more of the same will help us kill this pesky economy. I mean isn't that the plan? to destroy our economy? leaving us vulnerable for what? a possible takeover? who would want to do that you say? I guess i'd have to say take your pick i mean we have enemies all across the globe who would wish America harm hell its not like we are the world police or that we bother anyone is it? we only want to spread love and democracy around the world. wait a minute..... when did we become a democracy? i thought we were a Republic? whats that pledge? I pledge Allegeance to the flag of the united states of america and to the REPUBLIC for which it stands etc......

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A friend with weed is a friend Indeed

incoming peso > dollar

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What the hell do you think is aiding in my poorness? Rental property without paying renters is a burden, not an asset. By Poor, I mean not rich. My financial status is OK for now, but could change at any minute.

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Life is good, the water is sweet. The ground keeps moving beneath my feet.

Having a rental w/ renters not paying is a bad decision on the owners part, nothing to do with being poor. If a person owns multiple properties, that (IMO) is definitely not poor. You are not poor. You're better off than most citizens if you own multiple properties.