Stocks plunge globally as world reels from double whammy of coronavirus, oil crash
Beijing: Asian stock markets plunged Monday after global oil prices nosedived on worries of an oil glut due to a global economy weakened by the coronavirus outbreak.
Tokyo's benchmark index Nikkei tumbled 6.2 per cent, while Sydney fell 6.1 percent. Seoul sank 4.4 percent and Hong Kong lost 3.9 percent this morning. Shares also sank in the Middle East in Sunday trading.
Saudi Arabia, Russia and other oil producers are arguing over how much to cut output to prop up prices. U.S. crude fell 26 percent or $10.75 to $30.57 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, used for international pricing, dropped 25%, or $11.40 to $33.87 per barrel.
Tokyo's Nikkei 225 fell to 19473.07 and Hong Kong's Hang Seng sank 3.8% to 25,134.73. The Shanghai Composite Index was off 2.2% at 2,967.31.
The S&P-ASX 200 in Sydney fell 6.1% to 5,840.70. The Kospi in Seoul lost 4.4% to 1,950.02.
As the deadly coronavirus claims more lives around the world, dealers are fleeing out of riskier assets and into safe havens, sending gold and the yen surging and pushing US Treasury yields to new record lows.
While governments and central banks have unleashed or prepared to roll out stimulus measures, the spread of COVID-19 is putting a huge strain on economies and stoking concerns of a worldwide recession.
Trading floors were a sea of red on a punishing start to the day in Tokyo, Sydney, Hong Kong, Seoul, Jakarta, Shanghai and Wellington. The losses tracked sharp sell-offs in Europe and Wall Street on Friday.
Driving the declines was a ferocious sell-off in the oil markets, sparked by top exporter Saudi Arabia slashing prices -- in some cases to unprecedented levels -- after a bust-up with Russia over production.
Both main oil contracts were down more than 20 percent, having lost almost 30 percent in initial business.
Saudi Arabia launched an all-out oil war Sunday with the biggest cut in its prices in the past 20 years, Bloomberg News reported, after OPEC and its allies failed to clinch a deal to cut output.
Jeffrey Halley, senior market analyst at OANDA, said: "Saudi Arabia seems intent on punishing Russia.
"Oil prices... will likely be capped over the next few months as coronavirus stalls economic growth, and Saudi Arabia opens the pumps and offers huge discounts on its crude grades."
Energy firms were slammed, with Hong Kong-listed CNOOC tumbling 16 percent and PetroChina 10 percent down, while in Tokyo, Inpex dived 13 percent and Woodside Petroleum in Sydney fell 17 percent.
"Plummeting oil prices and spreading coronavirus are fanning fears of downside risks to the global economy," said Takuya Kanda, at Gaitame.com Research Institute.
Foreign exchange markets were also extremely volatile, with traders snapping up the yen -- seen as a hedge against global instability -- and selling off the dollar owing to uncertainty over the coronavirus in the United States.
Marito Ueda, senior trader at FX Prime, told AFP: "Fears over the virus's impact on the global economy and a plummet in US yields had investors seeking the safe-haven yen."
"It is essentially a flight from the dollar," he added. The greenback fell below 103 yen, levels not seen in almost three and a half years.
Analysts warned of further gyrations as the outbreak shows no sign of abating, with more than 100,000 people infected in 99 countries.
Italy, which has seen its death toll pass South Korea as the highest outside China, has put a quarter of its population into lockdown, while sporting and public events around the world have been cancelled.
"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."
