US stocks tumble amid oil market chaos
US stocks have tumbled at the open after American crude oil prices fell into negative territory for the first time ever yesterday evening, unsettling investors and highlighting the stress coronavirus has put the global economy under.
Wall Street’s Dow Jones index was 1.9 per cent lower shortly after the bell. The S&P 500 was down 1.7 per cent and the Nasdaq had slipped 1.6 per cent.
European markets were also lower. The UK’s FTSE 100 had dropped two per cent while Germany’s Dax was down 3.3 per cent. The pan-European Stoxx 600 was 2.8 per cent lower.
Markets fell across the board as investors reacted to the collapse in the price of May futures for WTI crude oil, the US benchmark, which fell to almost minus $40 per barrel yesterday.
“The very idea of someone paying someone else $40 to take oil off their hands is utterly ludacrous and yet, indicative of the crazy times we’re living in,” said Craig Erlam, market analyst at currency platform Oanda.
The May WTI crude oil contract expires today and the June contract – oil for delivery in two months’ time – has now also come under severe pressure. It has fallen 30 per cent today to $14.40 per barrel.
Brent crude, the global benchmark, has also felt the strain. It has tumbled 23 per cent to $19.60 per barrel.
Chris Beauchamp, chief market analyst at trading platform IG, said: “Oil’s rout continues to command all the attention in global markets, as investors move on from the Covid-19 crisis to the complete breakdown of normality in one of the world economy’s most vital components.”
Not only have the sharp downward moves shaken investors’ faith in the economy, but they have caused oil firms’ share prices to slide.
On the S&P 500, Occidental Petroleum and chemicals firm Lyondellbasell had both shed more than six per cent in early trading.
US investors also digested first quarter earnings and market updates. Drinks giant Coca-Cola, for instance, today said its global volume had fallen 25 per cent this month.
As investors left stocks, the safe-haven dollar strengthened. It was up 0.4 per cent on an index that tracks it against other currencies.