A Look At How The Oil Price Crash is Upending Markets
A crude-oil price war in the middle a worsening global virus outbreak sent a fresh wave of volatility surging through financial markets beginning on Monday in Asia.
Oil futures tumbled the most since the Gulf War in 1991, Norway’s krone slid to its weakest against the dollar since the 1980s and Australia’s benchmark stock index plunged the most since 2008.
Here’s a look at some of the moves on another epic day for markets:
The all-out price-war among the world’s biggest producers sent West Texas Intermediate crude futures down as much as 27% — the most since the Gulf War in 1991. Brent futures sunk 31% in a matter of seconds after the open of trading in Asia, after already suffering the biggest loss since the global financial crisis at the end of last week.
Currencies of energy exporters were quick to react. 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.
Futures on U.S. equities slumped, previewing an extension of the more than 12% drop in American benchmarks since their mid-February record highs. While energy and commodity stocks only make up about 5% the S&P 500, the oil-price crash is a further blow to already fragile investor sentiment. Australian shares fell the most since November 2008.
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%.
Implied volatility in U.S. equity markets surged as investors braced for further price swings. Front-month futures on the CBOE Volatility Index soared over 8 points to their highest since 2011.