![\"\"](\"http:\/\/persian-heritage.com\/wordpress\/wp-content\/uploads\/2020\/03\/EnglishWEBreuters_FILE_OPEC_meeting_7dec18-300x168.jpg\")
<\/p>\n<\/p>\n
VOA – Asian shares sank in a sea of \u00a0red on Monday as panicked investors fled to bonds to hedge the economic shock of the coronavirus, and oil plunged more than 20% after Saudi Arabia slashed its official selling price. The world’s top oil exporter plans to raise its production significantly after the collapse of OPEC’s supply cut agreement with Russia, a grab for market share reminiscent of a drive in 2014 that slashed prices by about two thirds. Brent crude futures slid $9.39 to $35.88 a barrel in chaotic trade, while U.S. crude shed $8.77 to $32.51. The safe-haven yen surged against emerging market currencies with exposure to oil, including the Russian rouble and Mexican peso, as analysts saw danger ahead.<\/p>\n
“Today’s price action puts at risk the fiscal health of the vast majority of sovereign producers and budget cuts and increased debt loads are now looming in the event of a prolonged period of low prices,” warned Helima Croft, head of global commodity strategy at RBC Capital Markets.<\/p>\n
“For the most politically and economically fragile producer states, the reckoning could be severe.”<\/p>\n
There were also worries that U.S. oil producers that had issued a lot of debt would be made uneconomic by the price drop.<\/p>\n
Energy stocks took a beating and E-Mini futures for the S&P 500 tumbled 4.6% having been limited down at one stage.<\/p>\n
EUROSTOXXX 50 futures fell 4.4% and FTSE futures 4.8%.\u00a0 Japan’s Nikkei fell 4.7% and Australia’s commodity-heavy market 5%. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 3.0% to a five-month low, while Shanghai blue chips dropped 2.1%.<\/p>\n
Not helping the mood was news North Korea had fired three projectiles off its eastern coast on Monday.<\/p>\n
“The scale of the collapse shows that any hopes of a temporary respite were in vain,” said Sean Callow, a senior FX strategist at Westpac. “The notion that overweight equities is the only real option in a world of super-low rates now seems to be from ‘The Time Before.\u2019<\/p>\n
“U.S. officials have barely moved beyond platitudes about ‘strong fundamentals’ so there is surely plenty more room for markets to price in major damage to the U.S. economy.”<\/p>\n
The number of people infected with the coronavirus topped 107,000 across the world as the outbreak reached more countries and caused more economic carnage.<\/p>\n
Italy’s markets are sure to come under fire after the government ordered a lockdown of large parts of the north of the country, including the financial capital Milan.<\/p>\n
“After a week when the stockpiling of bonds, credit protection and toilet paper became a thing, let’s hope we start to see some more clarity on the reaction,” said Martin Whetton, head of bond & rates strategy at CBA.<\/p>\n
“Dollar bloc central banks cut policy rates by 125 basis points, not as a way to stop a viral pandemic, but to stem a fear pandemic,” he added, while noting many had little scope to ease further.<\/p>\n
Bond bubble<\/strong><\/p>\n Markets are fully priced for at least a half-point rate cut from the Federal Reserve at its scheduled policy meeting on March 18, following last week’s emergency easing, and a move toward zero not long after.<\/p>\n The European Central Bank meets on Thursday and will be under intense pressure to act, but rates there are already deeply negative.<\/p>\n “The onus is falling, perhaps inevitably on the actions of governments to abandon budget surpluses and reinvigorate the demand side of the economy,” said Whetton.<\/p>\n Urgent action was clearly needed with data suggesting the global economy toppled into recession this quarter. Figures out from China over the weekend showed exports fell 17.2% in January-February, from a year earlier.<\/p>\n Analysts at BofA Global Research estimated the latest sell-off had seen $9 trillion in global equity value vaporized in nine days, while the average 10-year yield in the developed world hit 16 basis points, the lowest in 120 years.<\/p>\n “The clearest outcome of the exogenous COVID-19 shock is a collapse in bond yields, which once panic fades can induce huge rotation to ‘growth stocks’ and ‘bond proxies’ in equities,” they wrote in a client note.<\/p>\n Yields on 10-year U.S. Treasuries plunged to a once-unthinkable 0.50%, having halved in just three sessions.<\/p>\n Yields on the 30-year long bond dived 35 basis points on Friday alone, the largest daily drop since the 1987 crash, and briefly traded under 1% on Monday.<\/p>\n The fall in yields and Fed rate expectations has pulled the rug out from under the dollar, sending it crashing to the largest weekly loss in four years.<\/p>\n The dollar extended its slide in early Asia to reach 103.55 \u00a0en, depths not seen since late 2016, while the euro shot to the highest in over eight months at $1.1387.<\/p>\n Gold jumped 1.6% to clear $1,700 per ounce and reach a fresh seven-year peak.<\/p>\n","protected":false},"excerpt":{"rendered":" VOA – Asian shares sank in a sea of \u00a0red on Monday as panicked investors fled to bonds to hedge the economic shock of the coronavirus, and oil plunged more than 20% after Saudi Arabia slashed its official selling price. The world’s top oil exporter plans to raise its production significantly after the collapse of […]<\/p>\n","protected":false},"author":7,"featured_media":79538,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[20],"tags":[],"class_list":["post-81607","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured"],"translation":{"provider":"WPGlobus","version":"3.0.2","language":"en","enabled_languages":["fa","en"],"languages":{"fa":{"title":true,"content":true,"excerpt":false},"en":{"title":true,"content":true,"excerpt":false}}},"_links":{"self":[{"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/posts\/81607","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/comments?post=81607"}],"version-history":[{"count":0,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/posts\/81607\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/media\/79538"}],"wp:attachment":[{"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/media?parent=81607"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/categories?post=81607"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/PERSIAN-HERITAGE.COM\/en\/wp-json\/wp\/v2\/tags?post=81607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}