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Stocks and Oil Plunge Further as Markets Hit Monday Mayhem

jeffriess
March 9, 2020
by Joseph Jeffriess, Market Analyst

Let’s take a look at some of the key action in one of the wildest days we have seen so far for the financial markets.

Whether you are a bear or bull trader, today has been monumental, the moves we have seen up until this point of the day has been immense within multiple financial markets.

From the COVID-19 fear kicking into stock indices just after infection rates continue to soar across Europe, to a feud over crude prices between Saudi Arabia and Russia, today has definitely been a rare event seen this decade.

The plunge in oil was set off by weekend events after Russia rejected a proposal by OPEC to cut 1.5 million barrels per day of production. In response, Saudi Arabia not only cut its forward crude price to Chinese customers by as much as $6 or $7 per barrel, but it is also reportedly looking to raise its daily crude output by as much as 2 million barrels. This play made by the Saudis is not only seen to be an attempt to grab market share but a very loud and clear message to Moscow, that it is done playing games.

Crude prices tanked as a result of the feud between the two oil superpowers, losing more than 20% and claiming a dramatic start to the week. US Crude plunged 33.89% to a $27.66 low. This has price tested the Jan 2016 low, since then we had seen a steady fightback from buyers with a price that was just over 19% higher at $33.

If you take a look at today’s oil chart, you will be able to see just how ferocious the market reaction was over weekend developments.

The carnage was not only limited to oil, stocks, and some of the currencies also plunged during today’s trading session. The shares will most likely continue to fall during today’s European session. We’ve seen a continued exit en masse from equities due to the increased number of cases and deaths caused by COVID-19. Let’s take a look at some of the local numbers.

ASX is down 7.33% for the session, the Nikkei dropped 5.38% and the Hang Seng fell 4.23%. Currencies have seen some strange moves during today’s Asian session. The AUD/USD and AUD/JPY saw flash crashes with the A/J losing over 8% and at one stage the A/$ over 5%. The USDCAD blasted higher gaining close to 2.50%. The EUR and the GBP rallied to the USD, even though we expected them to drop with panic. The E/$ added close to % at it’s daily high. Gold started the session with a 1.20% gain but has fallen back by 1.73%. Bitcoin has been another asset that had been savaged, dropping 15% at today’s low.

Shares in Europe have started the week sharply lower, the FTSE MIB down 9% as COVID-19 continues to grow leading to two cities being quarantined. Other European indices remain deep in the red, the DAX -5.61%, the FTSE -6.32% and the CAC down 6.24%

We aren’t expecting things to get any better, as U.S. futures have gone into limit lock today just after sellers broke exchange limits. Currently, futures are back online but are deep in the red. DOW -4.87% SPX 4.96% and the Nasdaq is 4.82% lower. Please note they’re current futures positions and will change as price updates. The VIX continues to surge, its futures currently 33.89% higher at this stage in the day.

If you’re trading through these times of extreme volatility please manage your risk.

Good trading from Eightcap.
All times are AEDT.