Russia punched investors in the face as it refused to follow OPEC with further production curbs to match the slump in oil demand caused by the coronavirus breakout at last week’s Vienna summit.
Oil crashed more than 30% on Monday open, the most since 1991. WTI crude collapsed below $30 a barrel on huge investor deception, and rising worries regarding any future Russian collaboration. Brent fell to $31.
Equity markets kicked off the week with a colossal sell-off, as well. Nikkei lost up to 6%, CSI 300 and Hang Seng smashed 3.42% and 4.24% respectively, as the ASX 200 dived 7.33% on tumbling oil prices.
US equity futures as much as the daily limit of 5%, triggering trading curbs.
European indices are poised for a chaotic open. Trading on futures hint that the oil-heavy FTSE 100 could slip below the 6000 mark at the open. Energy stocks will certainly be badly battered by the heavy slump in oil prices.
The US 10-year yield crashed below 0.50% and the entire US yield curve ranging from 3-month to 30-year collapsed below 1% for the first time in history.
The EURUSD jumped to 1.1485 on hefty US dollar unwind. Cable recovered above the 1.30 mark.
The yen and the Swiss franc rallied on heavy capital rush to safety. The USDJPY tanked below 103 for the first time since October 2016. The USDCHF shortly traded below the 0.92 mark.
Rise in gold remained contained below the $1700 per oz, however, on fear that the negative correlation between gold and equities could break again and leave investors unprotected in such tumultuous market conditions.
By Ipek Ozkardeskaya
