Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Coronavirus shock and oil price fall pummel world stocks

Stock MarketsMar 09, 2020 11:17
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Passersby wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen displaying stock prices outside a brokerage in Tokyo

By Karin Strohecker

LONDON (Reuters) - Global stocks plunged on Monday and prices for crude oil tumbled as much as 33% after Saudi Arabia launched a price war with Russia, sending investors already worried by the coronavirus fleeing for the safety of bonds and the yen.

Saudi Arabia had stunned markets with plans to raise its production significantly after the collapse of OPEC's supply cut agreement with Russia - a grab for market share reminiscent of a drive in 2014 that sent prices down by about two-thirds. [O/R]

Brent crude (LCOc1) and U.S. crude (CLc1) futures slid as much as $14 to trade at $31.02 and $27.34 a barrel in chaotic trade before recovering some of their losses. [O/R]

European equity markets suffered hefty losses with London (FTSE), Frankfurt (GDAXI) and Paris (FCHI) tumbling between 6-7%. Italy's main index (FTMIB) slumped 10% after the government ordered a lockdown of large parts of the north of the country, including the financial capital Milan.

The pan-regional STOXX 600 (STOXX) fell into bear market territory -- a drop of more than 20% from its February peak. Oil stocks sank, with Premier Oil (L:PMO) down 54% and energy giant BP (L:BP) trading nearly 20% lower.

Heavy selling was set to continue on Wall Street with U.S. futures hitting their down limit.

"We are seeing this week, finally, a full-scale liquidation and signs of capitulation, full-scale panic - we see this in every asset," said Paul O'Connor, head of multi-asset at Janus Henderson.

"The oil price plunge adds a huge disruptive dynamic to markets that are already very fragile - investors are looking for losers in this move."

The losses in Europe followed sharp declines in Asia. MSCI's broadest index of Asia-Pacific shares ex-Japan (MIAPJ0000PUS) lost 4.4% in its worst day since August 2015 and Japan's Nikkei (N225) dropped 5.1%. Australia's commodity-heavy market (AXJO) closed down 7.3%, its biggest daily fall since the 2008 global financial crisis.

Investors piled into safe-haven bonds, driving the 30-year U.S. bond yields (US30YT=RR) beneath 1% on bets that the Federal Reserve will be forced to cut interest rates by at least 75 basis points at its March 18 meeting, after having already delivered an emergency easing last week.

The U.S. 10-year Treasury yield fell to as low as 0.318% (US10YT=RR) in its biggest daily fall since 2011 - during a sovereign debt crisis across the euro zone. [US/]

The number of people infected with the coronavirus rose above 110,000, and 3,800 have died from the virus.

There were mounting worries that U.S. oil producers that had issued a lot of debt would be made uneconomic by the price drop.

The mood was also hit by North Korea firing three projectiles off its eastern coast.

Noting that many central banks had little scope to ease further, Martin Whetton, head of bond & rates strategy at CBA, said "let's hope we start to see some more clarity on the reaction."

Graphic: U.S. crude vs energy sector ETFs https://fingfx.thomsonreuters.com/gfx/mkt/13/3021/2986/Pasted%20Image.jpg

BOND BONANZA

Markets <0#FF:> fully priced in an easing of 75 basis points from the Fed on March 18, while a cut to near zero was now seen as likely by April.

The European Central Bank meets on Thursday and will be under intense pressure to act, but rates are already deeply negative.

"This week’s ECB meeting will be the first test case for ECB President Christine Lagarde," ING's eurozone chief economist Carsten Brzeski wrote in a note. "With hardly any ammunition left and confronted with an external shock which cannot be tamed by economic policies, the ECB will have to balance carefully between words and deeds."

The 10-year Bund yield (DE10YT=RR) - the euro zone's leading safe asset - fell to a new record low of -0.863% while inflation expectations for the euro zone sank below 1% for the first time.

Data suggested the global economy toppled into recession this quarter. Figures out from China over the weekend showed exports fell 17.2% in January-February from a year earlier.

The fall in U.S. yields and Fed rate expectations pushed the dollar to its largest weekly loss in four years before it recovered some ground. (=USD). [USD/]

The dollar extended its slide to 101.58 yen , depths not seen since late 2016. It was last down nearly 3% at 102.42.

The euro shot to the highest in over 13 months at $1.1492 (EUR=), to be last at $1.1410.

Gold initially cleared $1,700 per ounce to a fresh seven-year peak, only to fall back to $1,677.4 amid talk some investors were having to sell to raise cash to cover margin calls in stocks. [GOL/]

Coronavirus shock and oil price fall pummel world stocks
 

Related Articles

Honda posts 4.2% rise in full-year operating profit
Honda posts 4.2% rise in full-year operating profit By Reuters - May 14, 2021

TOKYO (Reuters) - Honda Motor Co on Friday posted a 4.2 % increase in annual operating profit, with car sales recovering from the impact of the COVID-19 pandemic. Japan's No.2...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
uPleasure uPleasure
uPleasure uPleasure Mar 09, 2020 12:13
Saved. See Saved Items.
This comment has already been saved in your Saved Items
owners of some media is buying stocks..don't be surprised...only report negative and not cure .
Matt Hester
Matt Hester Mar 09, 2020 7:45
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Media won’t tell you that almost 62,500 have already recovered. Wake up. Do your own research.
Abdulla Abd
Abdulla Abd Mar 09, 2020 3:04
Saved. See Saved Items.
This comment has already been saved in your Saved Items
corona virus is more of news to shake the market than a real threat. last month influenza killed 5000 only in the US but no one talk about it, because that is usual. however press being unprofessional
xilla amp
xilla amp Mar 09, 2020 1:02
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Im too low spirited to read it all after my loss
William Lam
William Lam Mar 09, 2020 1:02
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Buy in when the market crashes.
Andy Giurgiu
Andy Giurgiu Mar 09, 2020 1:02
Saved. See Saved Items.
This comment has already been saved in your Saved Items
When do you know it's at the lowest?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email