- Another bad session for global equity markets
- Oil price crashes 30%
- Price war between Saudi Arabia and Russia
Some of the traders who have been in the markets long enough compare today’s trading session to the Black Monday crash in 1987. Markets already concerned with the fast spreading coronavirus were surprised by an oil price war between Saudi Arabia and Russia.
The number of infected cases across the world amounts to 111,354 with total number of deaths stands at nearly 3,900 globally as of March 9th. The most cases were diagnosed in mainland China, Italy and Iran. In Italy, the number of infected cases rose to 7375. Additionally the number of infected people in Germany and France exceeded 1000. The government introduced further restrictions in Italy. The northern regions of the country in which the epidemic center is located have been closed
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Create account Try a demo Download mobile app Download mobile appToday markets witnessed the biggest oil-price collapse since 1991 as Saudi Arabia announced the biggest cut in oil prices in more than 30 years. The Saudi Arabia has lowered the price of its own oil and promised to boost oil output to more than 10 million barrels a day thus starting a price war with Russia. It was a response to Russia’s disagreement during last week’s talks. As a result crude oil futures plunged as much as 30 percent in early morning. Now price of oil found some support and tries to recover early losses. Futures contracts for Brent Crude Oil are trading at $36.00 level.
Panic soon appeared on other financial markets. European and Asian equities plunged, volatility in the Forex market soared and money began to flow to the bonds market. At same point The10-year Treasury yield fell below 0.5% for the first time. Oil-related currencies went down, with the Mexican peso dropping 6%. Trading on Wall Street was suspended for 15 minutes as the S&P 500 fell 7%.
Later the markets were able to slightly recover. European and Asian equities finished the day significantly lower. DAX lost 7.94%, CAC 40 plunged 8.39% and Nikkei closed 5.07% lower and S&P / ASX 200 lost 7.33%. HSCEI is listed 4.52% below. The FTSE MIB was the weakest performer during today’s session with a decline of 11.17%
US indices are trading with heavy losses as well. S&P fell 5.94%, Dow Jones loses 6.27% and NASDAQ dropped 5.19%.
Interestingly gold, which is usually doing well in an environment like we witnessed today, ended the day nearly flat.
Now the investors already concerned with the coronovirus outbreak, will need to take into consideration the effects of trade conflict between these two countries in the global economy. Some investors are counting on further assistance from central banks. Financial markets estimate that there is a 59% chance that FED will slash interest rates to 0%. However we cannot be certain whether such actions will be sufficient enough to reverse the negative sentiment prevailing in the markets.
When it comes to data releases investors should pay attention to Euro zone revised GDP and Final Employment Change data published at 10:00 am GMT. RBNZ Governor Orr is also scheduled to speak today at 1:00 AM GMT and 30 minutes earlier data from NAB Business Confidence will be published.
Oil price (OIL.WTI) has reached the 161% Fibo level ($27.50), which should act as short-term support. At present fundamental factors play the major role, in particular further news regarding the escalation of the trade conflict between Russia and Saudi Arabia.
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