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US Stocks Plunge in Volatile Markets as Oil Price War Heats Up

Dow Jones falls 953 points, bonds yields under pressure in sign of flight to safe havens

U.S. stocks plunged after trading floors opened on March 11, as the wild coronavirus-driven market swings of recent weeks were inflamed by an oil price war that was heating up.

The Dow Jones Industrial Average (DJI) fell by 953 points, or 3.81 percent, by 10:32 ET on March 11. In a display of the kind of extreme market volatility that has roiled markets in recent weeks, the blue-chip index saw its worst-ever single-day drop of over 2,000 points on Monday, before soaring on Tuesday to close up by 1,167 points.

The Wall Street “fear gauge,” or the VIX volatility index, spiked again on Wednesday, breaking through to 51.36, or up by 8.58 percent. A level of 31 is viewed as a red-line of sorts, above which the market is seen to be awash in extreme uncertainty and investor anxiety.

After easing on Tuesday, safe-haven bonds were once again under pressure, with the benchmark 10-year Treasury note yield plunging by 13.46 percent, in a sign that investors were seeking refuge from risk.

Oil futures—both Brent Crude and West Texas Intermediate—fell by nearly 4 percent Wednesday.

Epoch Times Photo Table showing the main three Wall Street stock indexes—the S&P 500 (SPX), Dow Jones Industrial Average (DJI), Nasdaq Composite (IXIC)—along with the VIX volatility index, or “fear gauge,” the U.S. 10-year and 30-year bonds, and the West Texas Intermediate oil (USOIL) and Brent Crude oil (UKOIL) futures at 10:32 a.m. ET, on March 11, 2020. (TradingView)

Anything Can Happen in a Crazy Market

Oil producers have embarked on a global round of price cuts and production boosts as part of a fight for market share, ignited by top exporters Saudi Arabia and Russia, that has wiped more than 40 percent off the international oil market this year.

Following the collapse last week of coordinated output cuts by Saudi Arabia, Russia, and other major producers, Saudi Arabia said on Wednesday it would boost oil production capacity for the first time in more than a decade to 13 million barrels per day (bpd).

A day earlier, it announced a record increase in crude supply to 12.3 million bpd in April.

United Arab Emirates ADNOC joined in with a promise to increase production to more than 4 million barrels per day (mmbpd) in April, and accelerate a capacity expansion to 5 mmbpd.

These increases followed news on Tuesday that Russian oil companies might boost output by as much as 500,000 bpd, which sent the Russian ruble and stock markets plunging and delivered a fresh blow to crude prices that had already fallen by 25 percent on Monday.

“Anything can happen in a crazy market,” said a trader, who asked not to be named, from a Chinese refinery that has aggressively stepped up its purchase of cut-price Middle East crude, in comments to Reuters.

Epoch Times Photo
Epoch Times Photo A trader works on the floor of the New York Stock Exchange in New York City on March 11, 2020. (Andrew Kelly/Reuters)

Youll Be Hearing About It Soon

On Tuesday, U.S. stocks rose sharply in volatile trading after President Donald Trump met with Senate Republicans on Capitol Hill and delivered a message on a much-anticipated coronavirus relief plan.

Emerging from the March 10 closed-door meeting with senators, Trump urged calm in the face of the outbreak and said there was “tremendous unity in the Republican party” in formulating a response to counter economic fallout from the outbreak.

Trump, who in the past two days has broached a payroll tax cut and relief for companies hit hard by coronavirus fears, offered no specific details on whRead More – Source

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