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Oil market prices plunged when OPEC and its allies failed to reach an agreement on production cuts. All the markets, including stocks, currencies and cryptos are falling.
European equity indices were red across the board at the open on Monday as the coronavirus outbreak coupled with crashing oil prices rattled the global market. The pan-European Stoxx 600 fell 6.2%. All stocks on Italy’s FTSE MIB except pharma company Recordati failed to open at the start of the day’s trade. Italian blue-chip index went on slumping by more than 9.7% early in the session.
Asia Falls Deep in Red amid Japan’s GDP Contraction
Stocks in Asia saw steep declines on Monday at the close as well. Nikkei 225 in Tokyo fell more than 5% at the closing bell, marking its weakest level since January 2019 amid rising concerns over the coronavirus outbreak.
The death toll from the infection climbed by 22 in China to reach 3,119 nationwide while it topped 3,800 globally.
On the data front, Japan’s gross domestic product (GDP) contracted 1.8% in the fourth quarter of the fiscal year 2019 while the country’s trade deficit missed the estimates as it landed at ¥985.1 billion in January.
Australian S&P/ASX 200 plummeted 7.33% at the closing bell. Meanwhile, the Kospi in Seoul diminished 4.06% at 7:07 am CET South Korea announced it has 7,382 confirmed coronavirus cases, the most outside China. Chinese stock markets were down as well with the Hang Seng losing 3.57% at 7:09 am CET while the Shenzhen Composite slipped 2.89% at 7:10 am CET and the Shanghai Composite dropped 2.43% at 6:55 am CET.
Market Prices of Crude Oil Plummeting
Adding to the turmoil was plunging Treasury yields with the 10-year U.S. Treasury note dropping below 0.4% for the first time ever.
Prices of crude on Monday trimmed losses from earlier in the session after suffering the biggest decline since the 1991 Gulf War.
The steep fall was set in motion by Saudi Arabia’s decision to cut prices in order to offset losses it was bound to incur once Russia had made clear it has no intention of cutting output in line with OPEC’s proposal. Shares of oil giant Saudi Aramco Oil Co (TADAWUL: 2222) fell at the start of trade on the Tadawul stock exchange in Riyadh on Monday following the collapse of talks at the OPEC+ meeting.
Russian Energy Minister Alexander Novak told reporters Friday at the OPEC+ meeting in Vienna:
“As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier. But this does not mean that each country would not monitor and analyze market developments.”
Meanwhile, Saudi Crown Prince Mohammed bin Salman is reportedly aiming to become the country’s king this November. According to Middle East Eye, these plans have prompted the crown prince to arrest his chief rival, his uncle Prince Ahmed bin Abdelaziz, and charge him with treason. Aramco was down 10% to 27 riyals per share at 08:00 am CET.
The Kingdom said it is planning to ramp up production of crude in April by some 300,000 barrels a day, once again fanning fears of oversupply amid a sharp decline in global demand.
West Texas Intermediate for April settlement retreated 20.48% at 5:42 am ET to $33.07 per barrel. Meanwhile, Brent futures for delivery in May dropped 19.47% to $36.66 a barrel. Both benchmarks are down over 30% for the week.
Adam Crisafulli, 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 sector is like the ‘FANG’ of credit, esp. high yield, given the enormous amount of debt it has outstanding.”
All Currencies Drop, Crypto Included
The DAX sank 7.47% at the open, as the FTSE 100 lost 1.82% in the first minute of trade, only to fall nearly 9% minutes later. The euro gained 1.13% against the dollar at 9:05 am CET, buying 1.14335. At the same time, the pound advanced 1.10% versus the greenback to go for 1.31762.
The Japanese yen and the euro jumped sharply against the United States dollar on Monday with investors flocking to safe-haven assets as fears over the coronavirus outbreak continued to grip the markets.
The world’s biggest cryptocurrency, Bitcoin, suffered a major decline amid the ongoing slump in the oil market, losing over 10% in value in 24 hours. Other cryptocurrencies such as Ethereum and Bitcoin Cash, dove as well, amassing a whopping $26.43 billion loss for the cryptocurrency market.
At the moment of writing, Bitcoin was down 9.42%, to go for $7,999.60. At the same time, Bitcoin Cash was down 13.736% against the dollar changing hands for $257.57. Meanwhile, Bitcoin SV lost 10.31%, going for $190.91.