Global markets are in freefall again today and the contagion will spread to the UK when the markets open this morning as coronavirus cases raced towards 110,000 worldwide.
The FTSE 100 is predicted to open at least 300 points down this morning after Japan’s Nikkei index plummeted 6.2 per cent overnight, while the Australian stock market suffered its worst day since the 2008 crash because coronavirus is now expected to tip the economy into recession.
Global stock markets took hits overnight with the Tokyo stock market index plunging 6.2 per cent, Hong Kong 3.9 per cent, Sydney 6.1 per cent, and Riyadh eight per cent with the panic set to spread to London and New York today.
And oil prices also suffered the biggest plunge since the Gulf War in 1991.
A Sydney trader looks at a sea of red as the Australian Stock Exchange suffered its worst falls for 12 years after it emerged that coronavirus is now expected to tip the country into recession sending shock waves through world markets today
Brent Crude, the major trading classification for light crude oil that serves as one of the two benchmark prices for oil worldwide, sunk by 30 percent just seconds after trading opened in Asia on Monday, dropping to $31.02 a barrel at its lowest. Slump in value pictured over the week above
US West Texas Intermediate crude, the other main price benchmark for oil, dropped 27% to $30 per barrel – the lowest level since February 2016. This graph shows the plunge in oil prices on WTI over the past week
Crude oil prices plummeted 30 percent in a trade war between Saudi Arabia and Russia sparked by the virus.
While stock futures on the Dow sank 1,000 points, S&P 500 futures and Nasdaq Composite futures lost more than four percent of their value.
The 10-year Treasury yield broke below 0.5 percent for the first time ever as coronavirus fears and the price war forced investors to opt for safer government bonds, as per CNBC.
The stock market shake-up is due to panic over the coronavirus and a price war over crude oil after talks in Vienna between the Organization of Petroleum Exporting Countries alliance (OPEC) and Russia collapsed on Friday.
Brent Crude, the major international trading classification for light crude oil that serves as one of the two benchmark prices for oil worldwide, sunk by 30 percent just seconds after trading opened in Asia on Monday, dropping to $31.02 a barrel at its lowest point.
Goldman Sachs Group warned prices could drop into the 20s.
US West Texas Intermediate crude, the other main price benchmark for oil, dropped 27% to $30 per barrel – the lowest level since February 2016.
The drop in prices came after Russia and Saudi Arabia were unable to come to an agreement at the OPEC meeting.
The group sought to set oil production cuts due to a lack of global crude oil demand in the coronavirus panic.
OPEC had recommended additional production cuts of 1.5million barrels per day starting in April and extending until the end of the year.
But OPEC ally Russia rejected the additional cuts when the 14-member cartel and its allies, known as OPEC+, as per CNBC.
This chart shows how Brent crude prices have fallen to the second-greatest low since the Gulf War in 1991
The 10-year Treasury yield broke below 0.5 percent for the first time ever as coronavirus fears and the price war forced investors to opt for safer government bonds
The chaos in the oil market heightened when Saudi Arabia slashed official prices by the largest amount in at least 20 years on Saturday, according to Bloomberg.
Saudi Aramco, the world’s biggest exporters, slashed prices through April hoping to entice refiners to purchase Saudi crude over other suppliers.
The price cut signaled to buyers that the kingdom would increase output and flood the market with crude oil.
Russia further told companies they were free to pump as much oil as they could.
‘Crude has become a bigger problem for markets than coronavirus,’ Adam Crisafulli, the founder of Vital Knowledge, said Sunday. ‘It will be virtually impossible for the [S&P 500] to sustainably bounce if Brent continues to crater.’
This chart shoes how S&P 500 future sunk on Sunday losing four percent of its value
The Dow Jones Industrial Average pictured at Friday’s close. It’s expected to open with a 1,000-point loss on Monday due to the tumble in oil shares
The oil plummet is only adding to the brutal past few weeks the financial markets have suffered due to coronavirus. The Dow closed down 250 points Friday after sliding nearly 900 points earlier in the day. The Dow’s trajectory over the past month pictured above
‘It’s unbelievable, the market was overwhelmed by a wave of selling at the open,’ Andy Lipow, president of Houston energy consultancy Lipow Oil Associates LLC, said. ‘OPEC+ has clearly surprised the market by engaging in a price war to gain market share.’
Members of OPEC include Iraq, Iran, Kuwait, Saudi Arabia, Venezuela, Libya, the UAE, Algeria, Nigeria, Gabon, Angola, Equatorial Guinea and Congo.
The break-up of the alliance pushes oil markets into uncharted territory as cooperation between Russia and Saudi Arabia underpinned oil prices since 2016.
The US market wasn’t the only one to get hammered by the flux in oil prices.
The Nikkei 225, the stock market index for the Tokyo stock exchange, dropped 6.2 percent early Monday with oil markets down 27 percent in trading.
The dramatic losses follow a 10.1 percent drop for US oil on Friday, which was its biggest loss in more than five years.
The oil plummet is only adding to the brutal past few weeks the financial markets have suffered due to coronavirus.
The U.S. stock market is down 12.2% since setting its record last month on worries about how much corporate profits will fall because of COVID-19, according to Associated Press.
The Dow closed down 250 points Friday after sliding nearly 900 points earlier in the day.
Stocks kept falling sharply Friday, and bond yields took even more breathtaking drops as a brutal, dizzying couple weeks of trading showed no sign of letting up amid fears caused by the rising coronavirus death toll in the United States.
The Dow closed at 25,864 points – a 0.9 percent drop from Thursday but finished the week overall with a 1.8 percent gain
As of Sunday there are more than 109,000 global cases of coronavirus and over 3,000 deaths worldwide.