- Oil, stocks, bond yields, and cryptocurrencies plunged on Monday.
- The sell-off was sparked by Russia's refusal to follow other oil producers in reducing output.
- Saudi Arabia now plans to ramp up crude output and slash prices next month.
- Oil prices plunged by more than 25%, US indexes are set to open 5% lower, the entire US Treasury yield curve fell below 1% for the first time, and bitcoin dropped 8%.
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Oil, stocks, bond yields, and cryptocurrencies plunged on Monday after Russia refused to join other oil producers in cutting output in response to coronavirus, sparking a price war.
Crude oil futures plummeted by more than 30% at the open — the biggest one-day drop since the 1991 Gulf War — on the prospect of an oil glut and softer global demand.
Saudi Arabia plans to boost crude output and offer deep discounts to the US, Europe, and Asia starting next month, the Financial Times reported, citing two people familiar with the kingdom's oil policy.
"Russia punched investors in the face as it refused to follow OPEC with further production curbs to match the slump in oil demand caused by the coronavirus breakout," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a morning note.
Stock prices tumbled around the world. In London, Royal Dutch Shell fell 15%, BP fell 15%, and Premier Oil fell 57%. In Shanghai, shares in Ningbo Construction, Jilin Sino-Microelectronics, and Xiangtan Electric Manufacturing slumped by at least 10%. In the US, Chevron fell 13%, Exxon Mobil fell 11%, Apple fell 6%, and Tesla fell 10% in pre-market trading.
"The blood really is running in the streets, it's utter carnage out there," Neil Wilson, chief market analyst for Markets.com, said in a morning note.
"Equity markets are hideous today and these kind of moves are to be afraid of as they can lead to aggressive tightening in credit that can spiral into real financial distress," he added.
"We don't know even know what kind of impact the coronavirus will have on the economy yet bond and equity markets are screaming recession."
Investors sought shelter in US government bonds, pushing up prices and sending yields lower. The benchmark 10-year Treasury yield hit a record low of 0.32%, and the 30-year Treasury yield slid under 1%, taking the entire US yield curve below 1% for the first time in history.
Proponents of cryptocurrencies tout them as hedges in times of volatility, claiming they move independently to conventional financial assets. Investors disagreed, wiping more than $23 billion off the crypto market's total capitalization — a 9% decline — in less than 24 hours.
"Markets are completely out of luck because there is no good news coming from anywhere which can help the current sell-off," Naeem Aslam, chief market analyst at AvaTrade, said in a morning note.
"A real panic mode is on and there is no place to hide for investors," he added.
Here's the market roundup as of 9:40 a.m. in London (5:40 a.m. in New York):
- European equities dropped, with Germany's DAX down 5.9%, Britain's FTSE 100 down 6.3%, and the Euro Stoxx 50 down 6.3%.
- Asian indexes slumped. China's Shanghai Composite fell 3%, Hong Kong's Hang Seng fell 4.7%, Japan's Nikkei fell 5.4%, and South Korea's KOSPI fell 4.2%.
- US stocks are set to open lower. Futures underlying the Dow Jones Industrial Average, S&P 500 and Nasdaq fell between 4.8% and 4.9%.
- Oil prices tanked with West Texas Intermediate down about 20% at $33.20 a barrel and Brent crude down about 19% at $36.70.
- The benchmark 10-year Treasury yield slid to about 0.49%.
- Bitcoin slid 9% to $7,955 and ethereum fell 11% to $205.
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