Stocks turmoil: Japan on brink of bear market as oil falls through $28 – live updates

All the latest economic and financial news, as world markets continue to gyrate amid fears over China’s economy

Latest: European markets rally at the openJapan on brink of bear market
Oil falls though $28

8.49am GMT

City analysts are cautioning that today’s rally in Europe may be a temporary respite.

Mike van Dulken of Accendo Markets says that “concerns are still growing over global economic strength in the face of a collapsing commodities space”.

A positive start to the week for European equities? Well that makes a change

Oil remains front of mind for many and the prospect of Iranian supplies coming back onto the global market certainly rattled investors in the Middle East yesterday, but elsewhere the reaction has been rather more muted. We’ve seen a calm session in Asia, although with crude prices now retreating once again, it would seem ambitious to think that we can read too much into the current air of calm.

With many markets on Wall Street closed for Martin Luther King Day, this may also help calm nerves – the week may not open with quite the catastrophic start some had eyed.

8.41am GMT

European stock markets are actually rising this morning, which might reassure nerves.

The FTSE 100 index has gained 35 points, of 0.6%, to 5839. That claws back some of Friday’s rout, where the blue-chip index lost around 110 points.

8.32am GMT

Investors will be watching the oil market closely this week, says Michael Hewson of CMC Markets:

The continued weakness in commodity prices, particularly in the oil and gas sector continues to spook world markets and now that Iran has been given the green light to come in from the cold, it is likely to be difficult to see where the next rebound in oil prices is likely to come from, raising concerns about further bankruptcy losses across the sector, if as predicted prices fall further towards $20 a barrel.

Oil fell below $28 a barrel earlier – it’s now just above that https://t.co/eQHi9SRATU pic.twitter.com/eyFLBfaAqx

8.29am GMT

It’s been a grim few months for commodities, with oil at a 12-year low and many metals hitting their lowest levels since the financial crisis.

And Bloomberg’s Caroline Hyde flags up that City speculators are betting that the slump will continue:

Bets against #Commodities continue… pic.twitter.com/AeztpHxJa4

8.26am GMT

Oil traders have marked Iran’s return to the markets by sending the cost of crude oil down to its lowest level in over 12 years.

The West’s decision to lift sanctions on Tehran helped to push Brent crude down to $27.67 per barrel today. Traders are anticipating a new surge of supplies hitting the market, intensifying worries about supply gluts.

Related: Oil price dips below $28 to 13-year low as markets brace for Iranian supply

8.17am GMT

Japan wasn’t the only Asia-Pacific market to suffer the Monday blues.

Hong Kong’s Hang Seng index fell by 1.1%, hitting a three-year low, as fears over China’s economy hit confidence again.

8.08am GMT

Japan’s stock market is on the brink of a new bear market, after being hit by the global market turmoil.

Nikkei ends down 1.1% at 16955.57, closes below 17,000 for 1st time since Sept. pic.twitter.com/TnguP54uJS

7.52am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After the worst start to a New Year ever, world markets are facing another week of turbulence.

Related: Rouhani hails ‘turning point’ as Iran embraces post-sanctions era

Regarding China, we don’t see the cataclysmic 2008-style ‘credit crunch’ forming that some market participants do, but that doesn’t mean that we are not concerned.

There are significant risks. China now accounts for approximately 17% of global GDP; up from 10% in 2005. Any material slowdown in the second largest economy in the world would have significant ramifications for the rest of the globe. China is attempting to make the transition from a manufacturing-led economy to a service-led economy – a transition that took the UK generations – in a decade or so. That process is not going to be without difficulty, and the Chinese authorities are learning as they go. Mistakes will happen.

Continue reading…