Oil Crashes, Equities Plunge in‘Wild’ Trading: Markets Wrap

• Coronavirus deaths soar in Italy; Apple lets some work at home.

Oil prices crashed and equities plunged after crude producers launched a price war, an additional disruption to a global economy already struggling thanks to the Coronavirus. Bonds surged.

Among the tumultuous moves to kick off the week:

• Ten-year Treasury yield fell below 0.5% for first time; 30-year yield dropped under 1% for first time.
• Crude plummeted more than 30% at one point, sliding the most since the Gulf War in 1991.
• Futures on the S&P 500 Index cratered as much as 5%, triggering trading curbs.
• Norway’s krone slid to its weakest against the dollar since the 1980s. Mexico’s peso fell as much as 6%, to the weakest since the aftermath of border-wall advocate President Donald Trump taking office.
• Australian and New Zealand 10-year government bond yields hit fresh record lows.
• Australia’s benchmark stock index plunged the most since 2008.
• The yen soared to its strongest since 2016.

The oil-price crash, if sustained by producers led by Saudi Arabia failing to come to terms with each other, will exacerbate strains in U.S. high-yield credit, where the energy industry has a large
presence. It would otherwise prove a boon to consumers, but the Coronavirus is increasingly keeping them at home. Italy over the weekend effectively put its industrial heartland in the north of the country on lockdown.

Economists are having to rewrite their forecasts before the ink dries on the previous set. Morgan Stanley is among those seeing a rapidly rising risk of a technical recession across major economies, with the second quarter set to see continuing disruption thanks to the epidemic. Central bank stimulus may help eventually, though the outbreak will need to be contained first.

“You just don’t know which way things are going to go, it makes it very hard to price anything right now,” said Sarah Hunter, chief economist for BIS Oxford Economics, on Bloomberg TV. “We’re seeing that in the market with the wild oscillations that are coming through.”

Here are some key events coming up: 

• The European Central Bank’s policy decision comes Thursday amid expectations it may ease policy.
• The U.K. Chancellor of the Exchequer unveils the government’s 2020 budget on Wednesday.
• The U.S. core consumer price index, due Wednesday, is expected to remain subdued in February.

These are the main moves in markets:

Stocks

• Futures on the S&P 500 Index lost 4.5% as of 9:18 a.m. in Tokyo. The underlying gauge fell 1.7% on Friday.
• Japan’s Topix index declined 3%.
• Australia’s S&P/ASX 200 Index plunged 5%.
• South Korea’s Kospi index sank 2.8%.

Currencies

• The yen rose 1.4% to 103.93 per dollar.
• The euro bought $1.1389, up 0.9%.
• Mexican peso was down 4.6%.
• China’s offshore yuan added 0.2% to 6.9208.

Bonds

• The yield on 10-year Treasuries dropped 26 basis points to 0.49%.
• Australia’s 10-year yield retreated about 12 basis points to 0.56%.

Commodities

• West Texas Intermediate crude was down 21% at $32.60 a barrel.
• Gold added 1.6% to $1,700.49 an ounce.