The markets can’t seem to catch a break, with the Dow dropping below 20,000 points for the first time since 2017 as the coronavirus crisis continues to fuel a massive stock selloff despite governments across the world scrambling to inject some relief into the global economy. Oil, for its part, is also feeling the sting, with WTI falling to $23.27 and Brent falling to $27.82.
With one of the most volatile trading weeks on record since the 1929 Great Depression, money managers are increasingly calling for a full closure of the stock markets. Yesterday, the Philippines became the first country to shut down its stock market, but others could soon follow. Markets in the United States and the UK have already seen a number of 'circuit breaker' halts in the past couple of weeks.
The S&P 500 is currently down by over 6 percent, resuming a sell-off that's shaved 29 percent from its record highs. The Dow has taken the biggest hit, however, falling by more than 7 percent since trading began this morning.
Markets rallied 6 percent Tuesday after the Trump management proposed injecting as much as $1 trillion into the economy through a potential stimulus package while the Federal Reserve dusted off crisis-era programs to keep financial markets afloat, though the rally was short-lived.
Treasuries remained relatively unfazed after the most significant yield jump since 1982 though municipal bonds continued the most extensive loss since 1987 as markets prepared for a possible wave of spending.
This is the speediest plunge into bear territory in the history of stock markets. Fear is now officially driving markets.
What’s Next For Oil?
While the impact of the wider market fall is certainly weighing on oil prices, the bigger hit is coming from Saudi Arabia, which is relentlessly pumping more and more crude into markets as the price war between itself and Russia reaches a boiling point.
Oil majors have taken major losses in recent weeks, and it’s likely to get significantly worse before it gets better, with some analysts even suggesting that oil prices could slip into the negatives.
By Michael Kern for Oilprice.com
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