Major indices across the globe traded down ahead of a global leaders’ meeting at the World Economic Forum in Davos, Switzerland. The dip came on full force after oil prices drew back to the $28 zone, testing 12-year lows.

Asian markets slump

Asian markets were broadly in sell-off mode. Hong Kong’s Hang Seng took the worst beating, slipping 3.82% or 750 points to 18,866. Second worst was Japan’s Nikkei, which shed 3.7% to 16,416, confirming its entry into bear market territory.

The continuing fall in oil prices is still weighing on markets as investors remain jittery about the direction of the global economy. These concerns were heightened after China, the world’s second-largest economy, continued its slowdown as indicated by the data released yesterday by the Chinese government. China’s GDP growth fell to 6.8% in the fourth quarter from 6.9% in the previous quarter, and investors have not been very trustworthy of official Chinese figures that many see as inflated.

European markets also paired the previous day’s gains and opened sharply lower. Nearly all the indices in European markets registered more than 3% losses with France’s CAC 40 losing the most at 3.49% to 4,123. Germany’s DAX and Europe’s Euronext 100 were down 3.45% and 3.24% off their previous day’s close respectively.

Oil and sentiment

Oil prices, which showed some recovery yesterday, were nevertheless quick to breach the September 2003 low of $27.42. Sentiment surrounding the commodity were weak as Iran readies to flood the saturated global oil market with more supply. Meanwhile, the International Energy Agency (IEA) has kept its forecast for global oil demand static and ruled out any relief in the current oil glut at least until the end of 2015. The agency has even warned that oil prices might fall to fresh lows in the coming days.

US markets fizzle

Yesterday’s U.S. stock market rally was short-lived as the oil price slide weighed on expectations of increased stimulus efforts in China. On Wall Street, the Dow Jones Industrial Average closed 0.17% higher at 16,016.02. The S&P 500 too closed marginally up by 0.05% at 1,881.33, though the Nasdaq Composite was down a quarter of a percent.