Stocks have worst day since financial crisis

US stocks plunged more than 7.5 per cent in the worst day on Wall Street since the financial crisis, as a full-blown oil price war rattled financial markets already on edge over the spreading coronavirus. Treasury yields plummeted, crude sank 20 per cent and credit markets buckled.

The S&P 500 sank the most since December 2008, the Dow Jones Industrial Average tumbled 2,000 points and small caps lost more than nine per cent as investors fled risk assets with virus cases surging and the Trump administration so far unwilling to step in to soften the expected economic blow.

In a dramatic day across assets globally:

  • All but nine S&P 500 companies were lower Monday, with energy producers routed by 20 per cent. Exxon Mobil and Chevron were down more than 12 per cent. Banks lost 11 per cent, with an ETF that tracks regional banks had for its worst day since 2009. Apple sank 7.9 per cent and Dow Chemical plunged 22 per cent.
  • The rout began at the open, with losses reaching seven per cent four minutes in, triggering NYSE circuit breakers that halted trading for 15 minutes. The markets will close if losses reach 20 per cent. The measure is down almost 19 per cent from its Feb. 19 all-time high, threatening to end the record-long bull market that began 11 years ago to the day.
  • Crude tumbled the most since the Gulf War in 1991, after an OPEC+ alliance that had contained global production disintegrated. WTI and Brent slumped by about 25 per cent.
  • The 10-year Treasury yield fell below 0.5 per cent before climbing back to 0.57 per cent, and the 30-year yield dropped under 0.9 per cent, taking the whole US yield curve below one per cent for the first time in history.
  • The Stoxx Europe 600 Index fell the most since 2016 on trading volumes exceeding three times the 100-day average. Several of the region’s gauges look set to enter bear markets. Japanese stocks entered one earlier when they tumbled almost six per cent.
  • A US derivatives index that measures the perceived risk of corporate credit surged by the most since Lehman Brothers collapsed.
  • Exchange rates including the yen saw sharp moves as traders struggled to establish where new ranges might be. The yen was up about three per cent versus the dollar while the euro and Swiss franc both strengthened more than one per cent.
  • The oil-price crash threatened to upend politics and budgets around the world, exacerbate strains in high-yield credit and add pressure on central bankers trying to avert a recession. It typically would have proved a boon to consumers, but the coronavirus is increasingly keeping them at home. Investors are clamouring for some policy response from the Trump administration, which has so far signalled that it believes the spread is under control.
A support vessel sails alongside the crude oil tanker ‘Devon’ as it sails through the Persian Gulf towards Kharq Island oil terminal to transport crude oil to export markets in Bandar Abbas, Iran, on Friday, March 23, 2018. Geopolitical risk is creeping back into the crude oil market. Photographer: Ali Mohammadi/Bloomberg

President Donald Trump and his economic team will weigh measures later Monday to contain the fallout from coronavirus and a sudden crash in oil prices, with funding for a temporary expansion of paid sick leave and aid for battered US energy producers among possible steps. A Bloomberg gauge of financial stress for the US has deteriorated at the fastest pace since the great financial crisis.