Oil price plunge and further stock market drops

10 March, 2020

By ECCT staff writers


Global stock markets yesterday added to losses accumulated over the past two weeks following a massive drop in global oil prices. The dramatic drops were attributed to growing fears over the impact on global oil market demand and the overall economy from the coronavirus.


Hundreds of billions were wiped off values of indexes as global stock markets posted their steepest falls since the 2008 financial crisis on Monday. US stocks suffered their worst one-day fall since December 2008 and treasury yields plummeted to record lows.


The benchmark S&P 500 index fell 7.6%, bringing its losses since 19 February to 18.9%, just shy of the 20% decline that traders define as a bear market. The Dow Jones Industrial Average slipped 7.8%. Earlier Europe’s continent-wide Stoxx 600 lost 7% to close in bear market territory.

Saudi Arabia’s decision to launch an oil price war, after failing to agree to output cuts with Russia and other oil producers, sent energy stocks tumbling 20% or more, with ExxonMobil off 12% and the UK’s BP tumbling by over 20%. Almost £125bn was wiped off the value of the FTSE 100 in the fifth-worst day in history for the index of leading UK company shares, as it plummeted by 7.7% to finish the day below 6,000 points, its lowest level since straight after the Brexit vote in 2016.


Here in Taiwan, the TAIEX closed down 344.17 points, or 3.04%. According to a report on CNA, Foreign institutional investors yesterday sold a net NT$54.56 billion (US$1.81 billion) worth of local shares, the highest value in more than 12 years and also the third-biggest sell-off in a single day, while domestic proprietary traders sold a net NT$6.399 billion worth of shares. However, investment trust companies bucked the trend by buying a net NT$841 million worth of shares.  

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