Oil-driven sell off hits global markets | Calamatta Cuschieri

A fall in oil prices triggers market sell off after Russia and Saudi Arabia enter a price war

US markets saw a wild start to the week with major benchmarks logging 7% losses as the eruption of an oil-price war between Russia and OPEC together with coronavirus fears triggered a heavy sell-off across global equity markets. The Dow Jones Industrial Average was down 2,013.76 points, or 7.8 percent, at 23,851.02 while the S&P 500 dropped 225.81 points, or 7.6 percent, to 2,746.56. The Nasdaq Composite Index fell 624.94 points, or 7.3 percent, to close at 7,950.68.

European markets also fell before their American counterparts, with all of the region’s bourses posting sharp drops. The pan-European Stoxx 600 index, German Dax, French CAC40 and British FTSE100 all fell by more than 7% while Italy’s FTSE MIB plummeted over 10%. Oil and energy stocks were the worst hit, with BP dropping 19% and Royal Dutch Shell falling 17%.

Maltese markets also posted losses, with the MSE Equity Total Return Index closing down 1.483 percent at 9,195.575 points. Midi Plc led the losses with shares down 7.92 percent at €0.442, followed by Malta International Airport Plc which lost 5.79 percent to €5.70. Malta Properties Company Plc meanwhile posted the largest gain with shares up 4.92 percent at €0.64.

Falling oil prices hits markets

Crude oil prices suffered their biggest daily rout since the 1991 Gulf War on Monday as top producers Saudi Arabia and Russia began a price war that threatens to overwhelm global oil markets with supply. The two countries announced at the weekend that they would both raise production after a three-year pact between them and other major oil producers to limit supply fell apart on Friday.

A nearly 25% slump in oil prices triggered panic selling and heavy losses on Wall Street’s main stock indexes as the rapid spread of coronavirus amplified fears of a global recession. Brent crude futures fell $10.91, or 24.1%, to settle at $34.36 a barrel. The contract fell by as much as 31% earlier in the day to $31.02. U.S. West Texas Intermediate crude fell $10.15, or 24.6%, to settle at $31.13 a barrel. WTI earlier dropped 33% to $27.34, with both hitting their lowest levels since Feb. 12, 2016.


This article was issued by Peter Petrov, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.