US stocks plunged more than 5%, causing losses to exceed 7% and triggering trade halt, as large-scale oil price war rocked financial markets already on edge of the spread of the coronavirus. Treasury yields fell, crude fell more than 30%, and credit markets weakened.
The S&P 500 is now down about 18% from its historic high of February 19, threatening to end the record bull market that started 11 years ago today. NYSE breakers broke off trading for 15 minutes at 9:34 a.m. in New York, in an effort to limit panic. The following circuit breaker will trip if the losses reach 13%. Today’s decline is the largest since S&P downgraded the U.S. credit rating in August 2011.
In a dramatic day across the world active:
Exxon Mobil and Chevron fell more than 9%, while banks such as JPMorgan fell 12% and Citigroup fell 11%. Crude has fallen the most since the 1991 Gulf War, after an OPEC + alliance that had contained disintegrated world production. WTI and Brent offset some of their losses, but remained more than 20% down. The Stoxx Europe 600 index fell the most since 2016 on transaction volumes exceeding triple the 100-day average. Several gauges in the region seem ready to enter the bear markets. Japanese stocks came into effect earlier when they fell nearly 6% .A U.S. derivatives index that measures perceived corporate credit risk has increased the most since the collapse of Lehman Brothers. to be. The yen rose by around 3% against the dollar while the euro and the Swiss franc strengthened by more than 1%.
The oil crash, if prolonged, would disrupt politics and budgets around the world, exacerbate tensions on high-yield credit, and exacerbate pressures on central bankers to avoid a recession. This would generally have been a boon for consumers, but the coronavirus is keeping them more and more at home. During the weekend, Italy effectively blocked its industrial heart in the north of the country in order to stop the spread of the disease.
“The market was balanced and vulnerable to this volatility and crude oil has just exacerbated it,” said Randy Frederick, vice president of trading and derivatives for the Schwab Center for Financial Research. “The coronavirus itself was the main cause of the correction, but now it is even more exaggerated.”
Actions and shelter assets have shown little immediate reaction to news that the administration of President Donald Trump is writing measures to mitigate the economic fallout from the virus, including a temporary expansion of paid sick leave and possible help for companies facing a disruption due to the epidemic. A Bloomberg measure of financial stress for the United States has deteriorated at the fastest rate since the great financial crisis.
“In the event of a panic, asset prices are generally not exact,” said Kristina Hooper, chief market strategist at Invesco, in an interview at Bloomberg’s New York headquarters. “Today’s sale is emblematic of this for me. It’s really an instinctive reaction to what happened this weekend. “
Elsewhere, the spread between the Italian 10-year sovereign yield and that of Germany jumped 39 basis points to 218 basis points, the highest since August.
Here are some key events to come:
The European Central Bank’s political decision comes on Thursday when it is hoped that it could soften policy. The British Chancellor of the Exchequer unveils the government’s 2020 budget on Wednesday. The US consumer price benchmark , expected on Wednesday, should remain moderate in February.
These are the main movements on the markets:
– With the help of Todd White.
To contact the editors responsible for this story: Jeremy Herron at [email protected], Sam Potter, Dave Liedtka
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