Global markets took one on the chin today, both literally and figuratively. A combination of coronavirus panic, and the unexpected oil price deadlock between Russia and Saudi Arabia sent investors reeling, and caused European, Asian, and North American stock indexes to crater. The Dow fell 2014 points, marking its worst day since 2008 as investors fled for safe havens such as precious metals, and US treasuries. Other markets around the world fared no better. European markets tumbled an average of 7 percent, and in Asia the Nikkei dropped more than 5 percent and the Hang Seng Index lost 4.2 percent.
All things considered, some degree of volatility was expected to dominate Monday’s sessions given the coronavirus situation. However, it was the situation in the oil markets that brought on the rout. The oil production standoff between Saudi Arabia and Russia over the weekend took the world by storm and sent oil prices spiraling to some of their lowest levels since the 1991 Persian Gulf War. As it stands right now, Russia and Saudi Arabia’s actions could lead to an oil price war, something that could bring on unforeseen circumstances for oil and stock markets down the line.
The markets could’ve handled one or the other today, either the volatility brought on by coronavirus fears, or the oil collapse. Taking on both and coming out unscathed, however, was not in the cards. It remains to be seen how today’s events will affect global economies. Another day like today would put Wall Street on the verge of a bear market, and could quite possibly cause the juggernaut that is the US economy to begin to lose steam.
The next forty-eight hours will tell us a lot.