Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. stock futures sink by 5% down limit after crude rout

Published 03/08/2020, 11:58 PM
Updated 03/08/2020, 11:58 PM
U.S. stock futures sink by 5% down limit after crude rout

U.S. stock futures sink by 5% down limit after crude rout

By Herbert Lash

(Reuters) - U.S. stock futures plunged 5% to hit their daily down limit and halt trading after the biggest single-day loss in oil futures in almost 30 years on Sunday exacerbated fears of a credit crunch across financial markets.

Saudi Arabia's plans to hike crude production and slash its official selling price came after Russia on Friday balked at steep production cuts proposed by the Organization of the Petroleum Exporting Countries to stabilize prices hit by economic fallout from the coronavirus.

The decline in S&P 500 futures contracts was compounded by fears the impact from the fast-spreading coronavirus will intensify, leading to a U.S. recession and sharp tightening in credit markets.

The depth of the recent sell-off in both equities and high-yield bonds reflected uncertainty about the virus' impact, but also indicated confidence that markets would eventually stabilize and resume their upward trend, said David Joy, chief market strategist at Ameriprise Financial (NYSE:AMP) in Boston.

The plunge in stock futures suggests confidence is being fractured and the impact of the coronavirus no longer is manageable, he said.

After-hours trading in the futures contract for the benchmark S&P 500 stock index saw it slip to its 5% down limit. The decline indicates how much the S&P 500 might fall when trading begins on Monday.

The collapse in U.S. Treasury yields signals a potentially more adverse economic impact, Joy said. "In my experience, the bond market is more prescient than equities."

The implied yield on the futures contract for the 10-year U.S. Treasury note fell below 0.5% for first time. The benchmark Treasury hit a historic low of 0.469%, having halved in just three sessions, as markets reacted to the coronavirus.

The 20% plunge in oil prices, which in normal times would be positive for global growth, led to panic selling in stock markets as the risks of loss in oil positions added to already rising fears of a U.S. recession and a freeze in credit.

John Lekas, chief executive and senior portfolio manager at Leader Capital in Vancouver, Washington, was blunt in his assessment.

"We are in an Armageddon situation," Lekas said.

Saudi Arabia said it plans to boost crude output above 10 million barrels per day (bpd) in April after the current deal to curb production between OPEC and Russia - known as OPEC+ - expires at the end of March, two people with knowledge of the matter told Reuters on Sunday.

Investors earlier were spooked after Italy, the country hardest hit by the virus in Europe, essentially locked down much of its wealthy north, including the financial capital Milan. The move was aimed at containing an outbreak that saw the number of deaths leap on Sunday.

More than 107,000 people have been infected worldwide and 3,600 have died, according to a Reuters tally.

Latest comments

You are the you in this world. You create a world you want to see, live-in, be-in.
nobody talks about the market bubble forming in the last year ?!
Last year or last years?
You seriously are comparing a virus from now to a 18th century epidemic? Seriously??!! Come on...
Do you Americans realise that you are not the only people in the world? This is a worldwide thing and had nothing to do with your mad president and his mad followers.
Yes, but the US equity markets ARE linked to perceptions or evidence of a botched containment effort that maye push the PMI into the low 40s
Thank you for acknowledging our mad President. Some of us are trapped in this relationship like a battered wife. He tells his followers that the media lies so that he has become their only source of truth. The irony is that Trump lies all the time. Its cult like and scary. I have hope that the people of this country can redeem themselves to vote in someone better. I can't believe we have such a affluenza ********in office.
The best time to start acquiring some stock !
Speaking like a true bagholder
 replying like a try novice
Actually,  this is the very moment when the sellers will get excited, add to their short positions, and get wiped out. Watch how this week the Dow will make its biggest ever one day gain.
they need to close the market forcnext week let the bull ****go away
Dr.Eric Berg has a great video out that tells how Utterly Ridiculous this Virus thing is! Check it out on Youtube this site won't let me post the link!
It does not matter what you think or what he thinks. If the masses are scared then this ponzi scheme of a stock market is going to come crashing down.
CNN huge spreader of false news im glad somebody is thinking now CDC STATS 80000 deaths from flu a year in US so is 3600 worldwide a plague
So ask yourself, if you had to choose btw a flu and covid19, which would you rather get? Btw covid19 has mortality rate 45x higher than flu and has no vaccine yet
That's not many deaths ! The black plague was 20,000 a month! this is Way overblown thanks to Fake News like Reuters with all the Scare Tactics ruining lives !
 ok compare it to Asprin? 250 a month compared to 25.. Is that better? And that's just Asprin... this is a total Farce by the Media get it Morry?
This is just getting started...the plague lasted a decade and took 4 years to peak in barbaric times.
Reuters reports the news and has been a sound financials services reporting group probably before you were born
I agree the markets will recover too. That is after the SPX gives back almost everything in gained last year when there was no earning growth and massive multiple expansion and we went into 2020 with the believe that the earnings were going to catch up to the multiple.  Not only is that not happening, but we are now talking about being in the middle of an earning recession.  Companies will warn about there earnings across the board in the coming weeks and have an out in blaming it on the Corona virus !  And  Post now businesses will have a safety net to lay people off.  LOST jobs = LOST consumer confidence.  The thought of recession is a self fulfilling prophecy.  Cash is KING and likely will be for a while !
AAPL has already warned about supply chain issues, revenues miss in China where 12 % of their phones are sold . It's going to test the recent low at 262.  On 1000 shares that is a massive gain in just a few days as I shorted it at the close on Wednesday this past week.
Laugh al you want at the conspiracy theorists, but there is a connection between China, the global corporatists who got wealthy selling out to the Chinese, the deep state, academia and the socialist democrat party whos souls were sold looong ago. Other than that, this crunch is more about Russia's inability to play fair with anyone, especially the Saudis.. So thanks Russia! Thanks China for another nasty virus and endless lies about it. I'm not sure when the world is going to wash their hands of the Chinese and Russians, but it will be despite the absolute worst the socialists, kleptocrats, democrats, globalists and oligarchs in the Western world can muster. Bernie's right about a revolution.. he's just on the wrong side. The markets will recover. Hold your positions men!
does this worry you david wong? You said china did well to stop this vorus yet its all over. The americanese are now on full view of the danger of having their supply chain over seas... How long till americans start demanding factories be moved back?
 Thanks David. It's a cool design, and an homage to my best childhood friend. Despite my Grandfather being a POW in Japan, I remained close to my friend from Hokkaido. It's good to remember those who came to your defense, but poison to cling to past transgressions. Ironic that China hates America when we lost blood and treasure to liberate them, and we're now friends with Japan. I thinks that speaks volumes about differing levels of civility and intelligence.
it started with their pork supply going belly up...I agree there is more going on here than just a virus.
figure are above flue has a greater impact on the united state's each year
laize faire mr business major blame the media and making the coronavirus into the black plague
buy beans and salt meat boys say hello to the end ...hope u have plenty of ammo
Left wing hoax, LMAO.  The losses are real and about to get ugly considering we haven't seen the SPX FUTURES go lock limit down in 12 years.  If Russia wanted chaos, they now have it as OIL debt and equities get CRUSHED here which will force selling in other areas along with the earning recession we are currently in.. Short AAPL at 302 and staying short !
You don't want to short Apple. So many people short Apple has gotten a slap on the face...
Where is Trump? I thought he said, when oil gets put of hands, all he needs to do is to pickup the phone and start dialing, and things will be ok.
Reuters is evidently Nohing more than a Pay for Play left wing propaganda worthless  and moraless Rag? All you do is Spread unfounded and immoral Fear Mongoering ...Trump will still Win no matter what you do...What's his name that can't even remember who is wife is or what state he is in is not going to beat Trump.. He's a Basket case at best!
 I don't need your advice Loser!
Found the call holder.
 You are Blocked!
coronavirus penny stocks for the win!
which ones?
The Excessive Fear Mongoering that you are doing in this article is boarderline Criminal...you should be on trial !
 You are Extremely Gull-able aren't you?
They're doing it worldwide. Inciting chaos on the Brazilian forums as well... a tropical country with one or two Corona cases.
 That''s about all there is anywhere. It's total nonsense perpetraded as the end by the media trying to bring Trump down over absolutely NOTHING!
I watched the big short movie last night...and then... the market is down spiraling...
very true...I am sideline and waiting..only holding TVIX since 40-45
Tjhe Movie was a Sham too ! This is all one big farce orchestrated by the left because they can't win the election ! Don't fall for it!
as soon as u see buffet open that 130B+ cash reserve it's time to hunt
Good grief
A totally hyped market contagion. A foregone conclusion: GO SHORT, SET A FIRE, FAN THE FLAMES, YELL FIRE!, CALL THE PRESS, SEND OUT PIX and movies, to everyone, WAIT, then do everything in reverse ... --- PIMCO), one of the world's largest investment firms, warned clients the outbreak is likely to cause a relatively MILD and SHORT (4 MOS?) recession.
futures halted to prevent further losses, sounds like market manipulation to me.
Looks like you have no idea what you are talking about. It is easy to spit some words without thinking. Do some research and then talk, how about in this order? All the best!
Its manipulation, yes.
When it was gaining like crazy nothing was halted, now that it is plunging itu0027s being halted 😂😂😂
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.