Global Markets Plunge Over Coronavirus And Oil Price War Fears

Picture: Depositphotos.com/Bakalavar

Topline: Global stocks plunged after crude oil posted its biggest fall since the 1991 Gulf War after Saudi Arabia launched a price war with Russia.

• Japan’s Nikkei index fell more than 5% on Monday, while stocks in Hong Kong and mainland China were also down as panicked investors in Asia flocked to safe-haven assets like government bonds and the Japanese yen.
• European stocks followed suit, with London’s FTSE 100 index down almost 8% on Monday morning, France’s CAC 40 more than 7% and Germany’s DAX 6%. 
• The pan-European Euro Stoxx 50, measuring the Continent's 50 largest companies, plunged more than 6% on Monday morning, its worst performance in more than a year.
• U.S. futures were sharply down, with S&P 500 futures down more than 5%.
• Oil prices plummeted with the benchmark Brent crude down to $33.20 a barrel, while West Texas Intermediate fell 31%, to $28.32 a barrel on Sunday.
• The steep drop was triggered after Saudi Arabia announced it would raise production after OPEC's deal with Russia to supply collapsed on Friday.

Big number: Some $90 billion ($140 billion AUD) was wiped off Australia’s markets on Monday, with the benchmark ASX falling more than 7%—its worst performance since the global financial crash.

That 1970s Feeling

What to watch for: Oil prices could drop to a low of $20 a barrel, Goldman Sachs analysts warned on Sunday, if the coronavirus continues to spread and the oil price war intensifies. 

Key background: Global markets have posted some of their steepest falls since the 2008-2011 financial crisis with panicked moves from investors spooked by the potential impact of the coronavirus on the global economy, and an oil price war. The Federal Reserve’s emergency rate on March 3, 2020, provided a momentary confidence boost for the markets, which now will look for coordinated action from the G7 club of advanced economies to underpin the global economy.

Tangent: Some 110,000 people globally have been infected with Covid-19 to date, but as of Monday the number of new cases in China, where the pneumonia-like virus was detected, appear to be falling, while cases around the world continue to prompt strict quarantine measures, particularly in Italy, now the largest cluster of Covid-19-related deaths outside China.

Isabel Togoh, Forbes Staff