Black Monday: Oil crash sparks meltdown on virus-hit markets

London, March 9

World oil prices crashed on Monday, fuelling a vicious selloff on stock markets — which were already buckling under intense pressure over the spreading deadly coronavirus.

Stocks tanked as the global oil market nosedived 30% at one stage after top exporter Saudi Arabia slashed the prices it charges customers following a bust-up with Russia over crude production. The dollar slid versus the yen, a haven investment.

“The markets have passed from panic mode into pure hysteria,” said Ayush Ansal, chief investment officer at trading firm Crimson Black Capital.

“Markets were at breaking point before Saudi Arabia’s decision to launch an oil price war, but this latest development has taken them beyond that.” OPEC kingpin Saudi Arabia had last week wanted Russia to join the cartel in deep production cuts after world prices had already tanked on forecasts of plunging demand because of Covid-19.

However, Moscow declined, triggering Riyadh’s move to preserve market share and sideline its closes competitor — but creating fresh markets chaos.

“The war against the coronavirus is turning into a war for oil export markets,” said analyst Tamas Varga at oil broker PVM Associates.

The dizzying oil drop — the steepest since the 1991 Gulf War — sent investors fleeing for safety alongside mounting fears over the worsening fatal coronavirus, which has seen Italy lock down a swathe of its north.

“This will be remembered as Black Monday,” said analyst Neil Wilson at trading site Markets.com.

In late morning deals, London’s benchmark FTSE 100 index of top British companies were down 6.3% having tumbled by almost 9% early on.

In the eurozone, Frankfurt’s DAX 30 slumped 6.8% and the Paris CAC 40 dived 6.9%, compared with the closing levels on Friday.

Italy’s stock market took the heaviest battering after a chunk of the county’s northern region was sealed off — including Milan and Venice — as authorities struggled to contain the spread and impact of coronavirus.

In exceptionally volatile trade, Milan’s FTSE MIB index spiralled 9.9% lower. — AFP

Italy stocks take heaviest battering

• In late morning deals, London’s benchmark FTSE 100 index of top British companies was down 6.3% having tumbled by almost 9% early on
• In the eurozone, Frankfurt’s DAX 30 slumped 6.8% and the Paris CAC 40 dived 6.9%, compared with the closing levels on Friday
• Italy’s stock market took the heaviest battering after a chunk of the county’s northern region was sealed off, including Milan and Venice
• In exceptionally volatile trade, Milan’s FTSE MIB index spiralled 9.9% lower
• The Dow Jones Industrial Average sank 5.4% or 1,400 points, to 24,463

Trading halts in US for 15 minutes

• A plunge in the US markets on Monday triggered a 15-minute trading halt in stocks after the S&P 500 fell 7% shortly after the market opened
• The declines come as tumbling oil prices coalesce with concerns over economic damage from the spreading coronavirus to spur bouts of selling in a wide range of assets