Stocks, oil plunge over global fight for crude production

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A woman's image is reflected in the window at the Australian Stock Exchange in Sydney, Monday, March 9, 2020. Asian stock markets plunged Monday after oil prices nosedived on worries a global economy weakened by a virus outbreak might be awash in too much crude. (AP Photo/Rick Rycroft)

BEIJING – Global stock markets and oil prices plunged Monday after a fight among major crude-producing nations jolted investors who already were on edge about the surging costs of a virus outbreak.

The main stock indexes in Britain and Germany were down by almost 7%. Japan's benchmark closed down 5.1% while Australia's lost 7.3% and the Shanghai market in China was off 3%.

Trading in Wall Street futures was halted for this first time since the 2016 U.S. presidential election after they fell more than the daily limit of 5%. Bond yields hit new lows as investors bought them up as safe havens.

The benchmark U.S. crude price was down over 20%, the biggest daily drop since the Gulf war in 1991 to hit their lowest levels since 2016. They were down as much as 30% earlier, deepening a rout that began when Saudi Arabia, Russia and other major producers failed to agree on cutting output to prop up prices. A breakdown in their cooperation suggested they will ramp up output just as demand is sliding.

Investors usually welcome lower energy costs for businesses and consumers. But it can also hurt producers, such as oil companies. The last time crude prices fell this low, in 2015, the U.S. saw a raft of bankruptcies by smaller energy companies.

The abrupt plunge in markets added to the anxiety over the coronavirus, rattling markets and sending investors in search of safe havens like bonds.

“A blend of shocks have sent the markets into a frenzy on what may only be described as ‘Black Monday,’" said Sebastien Clements, analyst at financial payments platform OFX.

“A combination of a Russia vs. Saudi Arabia oil price war, a crash in equities, and escalations in coronavirus woes have created a killer cocktail to worsen last week’s hangover.”