Global stock markets and oil prices plunged Monday after a fight among major crude-producing nations jolted investors who already were on edge about the surging costs of a virus outbreak.
Global stock markets and oil prices plunged Monday after a fight among major crude-producing nations jolted investors who already were on edge about the surging costs of a virus outbreak.
The main stock indexes in London and Frankfurt were down by almost 7 per cent. Tokyo closed down 5.1 per cent while Sydney lost 7.3 per cent and Shanghai was off 3 per cent.
Trading in Wall Street futures was halted after they fell more than the daily limit of 5 per cent. Bond yields hit new lows as investors bought them up as safe havens.
The benchmark U.S. crude price was down over 20 per cent to their lowest levels since 2016. They were down as much as 30 per cent earlier, deepening a rout that began when Saudi Arabia, Russia and other major producers failed to agree on cutting output to prop up prices. A breakdown in their co-operation suggested they will ramp up output just as demand is sliding.
Investors usually welcome lower energy costs for businesses and consumers. But it can also hurt producers, such as oil companies. The last time crude prices fell this low, in 2015, the U.S. saw a raft of bankruptcies by smaller energy companies.
‘Killer cocktail’
The abrupt plunge in markets added to the anxiety over the coronavirus, rattling markets and sending investors in search of safe havens like bonds.
“A blend of shocks have sent the markets into a frenzy on what may only be described as `Black Monday,”‘ said Sebastien Clements, analyst at financial payments platform OFX.
“A combination of a Russia vs. Saudi Arabia oil price war, a crash in equities, and escalations in coronavirus woes have created a killer cocktail to worsen last week’s hangover.”
In Saudi Arabia, the Riyadh stock exchange sus