Spotlight for market news today is on the collapse of crude oil market, falling by as much as 30% on Sunday evening in what was the largest single-day drop since the U.S. invaded Iraq in 1991. The price cut followed with a breakdown of talks in Vienna last week. On Thursday, OPEC recommended additional production cuts of 1.5 million barrels per day starting in April and extending until the end of the year. But Russia rejected the additional cuts when the allies, known as OPEC+, met on Friday. OPEC failures to strike a deal in cutting oil production fanned concerns that sends it into a price war.

While countries are intensifying effort to control COVID-19, yet the epidemic still stoked fear creating supply shocks and forcing business activity to grind to a halt.

 

EQUITIES

Panic selling drove Wall Street to yet another consecutive losing week as the global COVID-19 cases count keep increasing for more than 110,000 today, with no end in sight. Bonds are yielding their lowest-ever rates as panic-stricken investors look for shelter in Treasuries, gold and the Japanese yen.

On Friday, major benchmark closes as follow:

S&P 500: 2,972.37, down -51.57 / -1.71%

Dow       : 25,864.78, down -256.50 / -0.98%

Nasdaq : 8,575.62, down-162.98 / 1.87%

 

OIL

Oil was the day’s biggest loss leader by far, hammered by OPEC’s inability to strike a deal with Russia on a production cut. OPEC and its allies failed to reach an agreement to prolong output cuts last week, firing to a start of price war on that already roiled prices. Over the weekend, Saudi Arabia slashed its official selling prices, while plans to pump more than 10 million barrels a day next month. Currently, Saudi Arabia is pumping up to 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

Brent crude closes at $45.27 per barrel on Friday and plunged 30% on early trading to $31.02 per barrel, its lowest level since Feb. 2016. WTI dropped $41.28 per barrel on Friday and open at $34.27 per barrel on early trading.

 

CURRENCIES

The US dollar lost ground against its international peers, with the dollar index dropping 0.5 per cent. The Japanese yen rose sharply against the U.S. dollar on the Tokyo foreign exchange market on Monday morning as stocks plunged, pushing past the ¥104 mark for the first time in more than three years. The yen broke the 104 mark and rose as high as 103.52 per dollar in early morning trade. The currency briefly entered the 101 yen range in morning trade.

For EUR/USD, the currency pair jumped to 1.1396 early Monday to an eight-month high.

But the currencies of oil-producing countries were hammered. The Canadian dollar dropped 1.67% against the U.S. dollar while Norway’s krone fell as much as 2.87%, its lowest level against the dollar since 1985, according to Reuters data.

 

GOLD

Gold spot price jumped past the $1,700 per ounce level for the first time since 2012 on Monday, as the widening coronavirus outbreak and an upswing in crude oil hammered equities and oil market and sent investors scurrying for safe havens.

On Friday, gold closes at $1670.80, while now trading at $1692. (at the time of writing)

 

ECONOMIC OUTLOOK

Analysts are eyeing U.S. shale producers, which are expected to suffer as cheap oil makes it unprofitable to churn out more supply.

Italy’s markets will open as usual on Monday, but traders are expecting a wild start to the week after the government ordered a lockdown of large parts of the north of the country on Sunday, including the financial capital Milan, to fight COVID-19.

 

TECHNICAL OUTLOOK

EUR/USD is having biggest weekly jump in three years and is expected to maintain the bullish tone.

As COVID-19 continues to spread across the globe, the economic impact has become undeniable. It’s still unclear whether the impact from the world-wide outbreak will be short lived or long-term, but some sectors won’t be able to survive either scenario. Pressure is actually more likely for the central banks and governments that is to deliver economic fixes.

While stocks trading situation seem vulnerable, that doesn’t mean investors should avoid bank stocks alltogether. Instead, current conditions could create a buying opportunity for those with a stomach for risk.