Stocks, oil plunge over global fight for crude production amid virus outbreak

BEIJING — Global stock markets and oil prices plunged Monday after a fight among major crude-producing nations jolted investors who already were on edge about the surging costs of a virus outbreak.

The main stock indexes in Britain and Germany were down by almost 7%. Japan’s benchmark closed down 5.1% while Australia’s lost 7.3% and the Shanghai market in China was off 3%.

Trading in Wall Street futures was halted for this first time since the 2016 U.S. presidential election after they fell more than the daily limit of 5%. Bond yields hit new lows as investors bought them up as safe havens.

The benchmark U.S. crude price was down over 20%, the biggest daily drop since the Gulf war in 1991 to hit their lowest levels since 2016. They were down as much as 30% earlier, deepening a rout that began when Saudi Arabia, Russia and other major producers failed to agree on cutting output to prop up prices. A breakdown in their cooperation suggested they will ramp up output just as demand is sliding.

Investors usually welcome lower energy costs for businesses and consumers. But it can also hurt producers, such as oil companies. The last time crude prices fell this low, in 2015, the U.S. saw a raft of bankruptcies by smaller energy companies.

The abrupt plunge in markets added to the anxiety over the coronavirus, rattling markets and sending investors in search of safe havens like bonds.

“A blend of shocks have sent the markets into a frenzy on what may only be described as ‘Black Monday,’” said Sebastien Clements, analyst at financial payments platform OFX.

“A combination of a Russia vs. Saudi Arabia oil price war, a crash in equities, and escalations in coronavirus woes have created a killer cocktail to worsen last week’s hangover.”

In Saudi Arabia, the Riyadh stock exchange suspended trading of state-owned oil giant Saudi Aramco after its share price sank by the daily 10% limit at the opening.

Investors already were on edge about the mounting costs of the coronavirus outbreak that began in China and has disrupted world travel and trade.

Anxiety rose after Italy announced it was isolating cities and towns with some 16 million people, or more than one quarter of its population, in its industrial and financial heartland.

In Europe, London’s FTSE 100 tumbled 6.6% to 6,034 after opening down by more than 8%. Frankfurt’s DAX shed 6.9% to 10,743 and the CAC 40 in France lost 6.9% as well, to 4,793. Italy’s FTSE MIB plunged 10% to 18,713.

On Wall Street, trading in futures for the Dow Jones Industrial Average and the S&P 500 was frozen after both fell by more than 5%, a daily limit. The last time they were frozen was just after U.S. President Donald Trump was elected in 2016.

Companies have been hit by travel and other controls that are spreading worldwide as the global number of coronavirus infections rose past 110,000 worldwide.

Tokyo’s Nikkei 225 fell to 19,698.76 after the government reported the economy contracted 7% in the October-December quarter, worse than the original estimate of a 6.3% decline. That was before the viral outbreak slammed tourism and travel but after a sales tax hike dented consumers’ appetite for spending.

Hong Kong’s Hang Seng sank 4.2% to 25,047.42. The Shanghai Composite Index declined to 2,943.29.

The S&P-ASX 200 in Sydney retreated to 5,760.60. The Kospi in Seoul lost 4.2% to 1,954.77.

India’s Sensex retreated 6.2% to 35,255.73. Markets in Taiwan, New Zealand and Southeast Asia also declined.

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