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Tuesday, 10 March 2020

Global markets suffer worst day’s trading since the 2008 crash

Global markets suffer worst day’s trading since the 2008 crash: US and European stock markets saw their worst single-day losses since the 2008 financial crisis yesterday as traders, already rattled by the escalating covid-19 crisis, reacted to a Saudi-Russia oil price war that caused the biggest collapse in oil prices since the Gulf War in 1991.

The circuit breakers were triggered within minutes of the opening bell on Wall Street as the Dow Jones plunged 2000 points from the off. The markets failed to rally through the day leaving the Dow down 7.79%, the S&P 500 7.6% lower and the Nasdaq 7.29% in the red.

The situation in Europe was just as bad: All major European indices had fallen at least 7.5% by the close of play.

The yield on the benchmark US treasuries fell below 0.5% before recovering to 0.57% at the end of the day. The entire US yield curve finished below 1% for the first time ever after the rate on 30-year bonds slipped under 0.9%.

Oil prices suffer biggest one-day drop since the Gulf War: Oil prices fell to four-year lows yesterday after Saudi Arabia and Russia declared a price war that looks to flood the market with crude at a time when global demand is already low due to the covid-19 outbreak.

Fear index spikes to 12-year high: The VIX index — a measure of volatility in US markets — spiked to its highest level since December 2008.

EL ERIAN: Panic caused after the market lost its final anchor: “We have lost basically all our anchors. We lost the economic anchor with the coronavirus, we lost the policy anchor with people losing confidence in the Fed’s ability to turn things around and over the weekend we lost a market anchor with OPECs swing producer role going out the window. This is going to be really treacherous for a while,” Mohamed El Erian told CNBC’s Squawk Box.

Expect the Fed to cut rates to fire its remaining bullets in the coming months: Capital Economics is now forecasting the Federal Reserve to cut rates by another 100 bps in its next two meetings, taking the fed funds target range down to 0.0-0.25%.

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