Just when the market was reeling from coronavirus fears, the prices of crude oil faced its worst drop since the last 30 years, right after the collapse of an alliance between OPEC and Russia. Such trending put the investors in immense panic and the global stock market showed a sharp decline. While the S&P 500 index fell by 6%, the DOW Jones index reported a 2046-point drop! On the other hand, the tech-heavy Nasdaq composite index saw a drop of about 5.4% on Monday. The New York Stock Exchange paused for 15 minutes as soon as the market dropped by a total of 7%. After they reopened, the market regained some of their losses but finished way below expectations at the time of the closing bell.
The impact of the oil price drop wasn’t only restricted to the US stock market, Australia’s S&P/ASX ended with a 7.3% loss which is touted as the biggest drop since October 2008.
The other significant losers of the day were-
- Japan’s Nikkei 225- 5.1%
- Hong Kong’s Hang Seng (HSI) – 4.2%
- China’s Shanghai Composite Index – 3%
The yield on 10-year Treasury once again hit record lows with a drop of 0.5%. The core reason for this panic was Saudi Arabia’s sudden launch of a price war in the oil markets. They wish to regain the global market after Russia denied any support to the OPEC in rescuing the oil market from the plunging demands due to coronavirus outburst.
The coronavirus is only getting worst with every passing day and it is inducing adverse effects on the global economy. As of yet, the virus has impacted as many as 108,000 people and its consequences are derailing various economies of the world. In Italy, nearly 16 million people are put under semi-lockdown while the number of cases in Europe keeps rising.
Right on the opening minutes of the day, the European markets took a plunge. One of the major indices, FTSE 100 (UKX) dropped by a huge 8.5%. It happens to be the worst drop for the index since the global financial crisis ion 2008. DAX index from Germany slipped 7.4% while the benchmark index of Italy slumped 701%.
The US oil prices faced a steep fall of 23% and was trading at a $31.84/ per barrel when the market closed on Monday. The oil prices are truly at its lowest since the year 1991, according to reports from experts. The oil price war has further made this US Stock market a complete pandemonium for the investors.