Monday’s Market Mayhem, From Oil to Credit, in Charts
A crude-oil price war in sent a fresh wave of volatility through the financial markets, even as coronavirus outbreak worsens.
(Bloomberg) -- Whether trader or investor, analyst or observer, Monday in markets looks like one to tell the grandchildren about.
An oil price war has broken out in the middle of a worsening global virus outbreak, and it has triggered asset moves around the world that in some cases have never been seen before. Crude itself at one point dropped by a third. Treasury yields fell to unprecedented levels across the curve. U.S. stocks dropped so swiftly trading was halted.
On a historic day, here’s a look in more detail at some of the biggest moves:
The Oil Crash
The all-out price-war among the world’s biggest producers crashed oil markets by about a third earlier. They pared declines, but were still down nearly 24% as of 4:08 p.m. in New York. Crude futures suffered the second-largest decline on record in the opening seconds of trading in Asia, behind only the plunge during the Gulf War in 1991. Brent for May settlement tumbled as much as $14.25 a barrel to $31.02. West Texas Intermediate crude for April slumped as much as 34% to $27.34 a barrel.
Stocks Frozen
The severe rout in U.S. stocks triggered trading curbs that the New York Stock Exchange put in place after the 1987 Black Monday crash. A 15-minute trading halt took hold after the S&P 500 Index fell 7% to 2,764.21 as of 9:34 a.m. in New York, triggering the breaker for the first time since December 2008 at the depths of the financial crisis. The S&P 500 trimmed losses after re-opening, but resumed its slide to close 7.6% lower.
Credit Crumbles
The cost to protect U.S. investment-grade debt against default surged by the most since Lehman Brothers declared bankruptcy in the height of the 2008 global financial crisis. Dozens of energy bonds plunged by double digits, the latest hit in a grim few weeks for junk-rated companies in the industry.
Bombed-Out Bond Yields
U.S. Treasury yields plunged, with the rate on 30-year bonds diving as much as 59 basis points, as rising expectations the Federal Reserve will cut policy rates to 0% in the coming months drove investors to reach to longer maturities for yield. Rates on benchmark 10-year notes plunged as low as 0.31%, before rebounding to 0.56%.
Bear Market Dominoes
Monday’s plunge in equities has pushed a number of major European stock benchmarks into bear market territory, with losses exceeding 20%. Italy’s FTSE MIB has been the most hit, down more than 25% from a high reached last month.
Commodity Currencies Roiled
Currencies of energy exporters were quickest to react to the oil plunge. The Norwegian krone fell to its lowest since at least 1985 versus the dollar and the Mexican peso dropped to a more than three-year low.
Safety Surge
The yen jumped to its strongest level against the dollar since 2016 as investors sought shelter. As of Sunday, about half of the world’s countries have cases of Covid-19 and Italy’s virus deaths rose by 57%. Japan’s currency was up nearly 3% against the greenback.
Volatility Ratchets Up
The Cboe Volatility Index surged to the highest since 2009 on Monday as a plunge in oil prices frazzled traders already on edge over the coronavirus. The VIX, which measures the 30-day implied volatility of the S&P 500 based on out-of-the-money options prices, jumped as high as 62, its highest level since December 2008 on an intraday basis.
--With assistance from Blaise Robinson, Michael Msika, Stephen Spratt, Ruth Carson, Sarah Ponczek, Yakob Peterseil, Allison McNeely, Cormac Mullen, Jessica Summers, Rita Nazareth and Jan-Patrick Barnert.
To contact the reporters on this story: Katherine Greifeld in New York at kgreifeld@bloomberg.net;Sam Potter in London at spotter33@bloomberg.net
To contact the editors responsible for this story: Sam Potter at spotter33@bloomberg.net, Jeremy Herron, Cecile Gutscher
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