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Global markets were in a massive state of turmoil on Monday as major indices, including Dow Jones and S&P 500, collapsed over 7% triggering circuit breakers and suspending trading on Wall Street for 15 minutes.
Bloodbath continues on Wall Street with the start of the second week of March 2020. The crashing crude prices after a failed OPEC deal left the global markets in turmoil and severe pain. Dow Jones crashed straight over 2000 points or close to 8% on Monday morning. Needless to say, this was the sharpest single-day fall of the index after the 2008 financial crisis. After Monday’s fall, Dow Jones a whopping 5000 points in total over the last month.
The rising fears of the COVID-19 virus spread have gripped the global economy in shackles. Apart from Dow Jones, Monday’s market crash was across all the indexes. The S&P 500 and Nasdaq also dropped 7% on Monday trigger circuit breakers and suspending trading for 15 minutes as per the market rules. This certainly created a huge panic in the market resulting in stocks falling from the roof. Speaking to CNBC’s Bob Pisani, New York Stock Exchange President Stacey Cunningham said:
“The market circuit breakers are designed to slow trading down for a few minutes, give investors the ability to understand what’s happening in the market, consume the information and make decisions based on market conditions. This is operating as it’s supposed to.”
Brent Crude Hits a Multi-Year Low
After last Friday’s failed meeting between the OPEC and non-OPEC allies, Brent crude prices came tumbling down on Monday. The Kingdom of Saudi Arabia has slashed crude prices for the month of April, after failing to reach a consensus on supporting the oil markets.
On Monday, crude prices dropped 30% in a single day falling all the way to $32 per barrel. The U.S. benchmark commodity witnessed its worst day in almost the last three decades since January 17, 1991. Adam Crisafulli, the founder of Vital Knowledge, said:
“Crude has become a bigger problem for markets than the coronavirus. It will be virtually impossible for the [S&P 500] to sustainably bounce if Brent continues to crater”.
The oil war between Saudi and Russia is the real reason behind Monday’s market crash, said U.S. President Donald Trump in his tweet.
Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!
— Donald J. Trump (@realDonaldTrump) March 9, 2020
“The idea that lower gasoline prices are going to put more cash in workers’ pockets and give consumer spending and the economy a boost doesn’t seem to cushion the blow for stock market investors. They want out. Big time. The sky is falling. Get out, get out while you can. Wall Street’s woes have to eventually hit Main Street’s economy hard,” said in a note Chris Rupkey, MUFG Union Bank’s chief financial economist.
The illustrations were provided by Depositphotos.com