The Monday Market Minute
- Global stocks plunge, oil prices collapse and bond yields hit historic lows in a wild Monday trading session that has shaken investors around the world.
- U.S. futures trading suspended "limit down" after falling nearly 5% in early trading amid the global equity market sell-off.
- Coronavirus cases rise past 110,000, while U.S. health officials warn its domestic spread is all but assured, raising the prospect of near-term recession for the global economy.
- Benchmark 10-year Treasury yields tumble the most since 2009, taking the notes to 0.318%, while 30-year bonds fall to 0.864% as Fed rate bets accelerate.
- Gold briefly rising past $1,700 per ounce, while the yen hits a 2016 low of 102.05 as investors flee risk markets around the world and shed the U.S. dollar.
- Global oil prices collapse, falling the most since the 1991 Gulf War, as Saudi Arabia looks to ram up production following last week's failure to maintain production cut agreements with Russia.
- U.S. equity futures suggest another 1,000-plus point decline for the Dow Monday, with sharp opening bell declines for the S&P 500, even as investors bet on a 75 basis point rate cut from the Fed next week..
U.S. equity futures plunged lower Monday, following some of the biggest single-day moves in world markets since the global financial crisis, as coronavirus concerns pulled bond yields sharply lower and oil prices cratered after the collapse of OPEC's agreement on production cuts late last week.
With global coronavirus infections rising past 110,000, and the death toll approaching 4,000, global investors can no longer ignore the pandemic's impact on the world economy, particularly now that U.S. health officials are warning its domestic spread is all but assured.
Compounding the global market sell-off, which Bank of America estimates has destroyed some $9 trillion in equity value in just 9 days, is a concurrent fall in government bond yields, which are moving at a speed not seen since the global financial crisis.
Investors are betting that the Federal Reserve will need to slash rates by a further 75 basis points when it meets next week in Washington -- following last week's emergency 50 basis point reduction -- in order to inoculate the U.S. economy against COVID-19's destruction.
That's pulled benchmark 10-year U.S Treasury yields to a fresh all-time low of 0.31% in overnight trading, before easing to 0.417% amid the sharpest decline since 2009, while 30-year bond yield crumbled to an almost unthinkable 0.864%.
Safe-haven flights in overnight trading were not only evident in bond markets, as well, with gold briefing topping the $1,700.00 per barrel mark and the yen rising to a 2016 high of 102.05 against the U.S. dollar.
U.S. equity futures reacted in kind, with contracts tied to the Dow Jones Industrial Average suggesting an opening bell plunge of more than 1,300 points, while those linked to the S&P 500 are looking to a 151 point slump for the broader benchmark. Nasdaq futures indicate a 435 point opening bell plunge.
Futures trading was suspended, however, as each of the three major indices traded around 5% lower from their Friday closing levels.
Active trading in the main SPDR S&P 500 ETF (SPY) - Get Report, however, continues, with the market's biggest passive investment vehicle slumping 7.2% to indicate an opening bell price of $276.10 each. The SPDR Dow Jones Industrial Average ETF (DIA) - Get Report, meanwhile, was last seen 6.82% lower at $241.20 each.
European stocks were also under enormous pressure at the start of trading, with the Stoxx 600 benchmark tumbling 7.2% to bring the broadest measure of regional shares into bear market territory following its early February peak.
In Germany, the trade-sensitive DAX performance index fell 7.9%, a move that puts it on pace for its biggest one-day decline since reunification, before firming to a 6.7% decline while Britain's FTSE 100 plunged 8.2% to take the benchmark back to levels last seen during the 2016 Brexit sell-off before paring that decline to around 5.95%.
A stunning collapse in global oil prices only added to the market's Monday mayhem, following last week's OPEC debacle, during which cartel leaders and non-member allies such as Russia not only failed to deepen a pact on production cuts -- despite the impact it would have on the global economy amid a dangerous pandemic -- but also allowed their current agreement, which takes 1.2 million barrels from the market each day, to expire.
In what many analysts see as a tactic designed to punish Russia for its failure to support OPEC's proposal, Saudi Arabia is now slashing selling prices and vowing to ramp-up production as early as next month in order to win market share, ending crude futures falling the most since the first Gulf War in 1991.
Brent crude futures contracts for May delivery, the global benchmark, were last seen an astonishing $9.89 lower from their Friday close in New York and trading at $35.38 per barrel, while WTI contracts for April were marked $9.41 lower at $31.87 per barrel.
Overnight in Asia, the yen's rise, as well as predictions of a global recession from the knock-on effects of travel restrictions, business closures and lost capacity from the coronavirus, sent Japan's Nikkei 225 more than 5% lower on the session to close under the 20,000 point mark for the first time in more than 14 months.
Notable declines in China and South Korea, as well as Hong Kong and Australia, pulled the region-wide MSCI ex-Japan benchmark 5.3% lower heading into the final hours of trading.