Sharp opening slide on tap as financials sink, crude soars

Small-cap shares are expected to open sharply lower, pulled down by overnight declines in financial stocks in the wake of poor earnings results by American International Group (NYSE:AIG). The Russell 2000 (NYSE:IWM) was down about 0.6% in after-hours action, which would translate to an opening near 715.30.

Rubbing salt in the bulls’ wound this morning were a sharp extension of the crude oil spike and a stiff decline in the U.S. dollar. Crude oil prices stormed right through $125 dollars a barrel overnight, and almost hit $126 before slowing down. Meanwhile, the U.S. dollar was off about 0.6% against the euro ahead of the U.S. stock market opening.

AIG shares were off about 9% in after-hours trading, and Citigroup (NYSE:C) was down about 2%. Another large bank, HSBC, was off over 2% overnight after an analyst downgrade. In general, the AIG earnings appear to be a flashpoint to stir up the credit crisis fears again ahead of the weekend.

Investors around the world were in a selling mood overnight, with the European DJ Stoxx 50 down about 1.8%, Japan’s Nikkei down 2.06% and Hong Kong’s . . .

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