Stocks striked as oil price crash adds to coronavirus fears

Stock
markets plunged around Asia on Monday, as panic selling set in with traders
fretting over the economic impact of the new coronavirus and digesting a free-fall
in the oil price.

By
mid-morning, the benchmark Nikkei 225 index had dropped 5.10% or 1,058.06
points to 19,691.69, while the broader Topix index was off 5.01% or 73.69
points to 1,397.77.

Other
markets in the region were also suffering with Hong Kong stocks down 3.8
percent at the open, Australia off more than five percent and equities in New
Zealand and South Korea both down by just under three percent.

In China,
the benchmark Shanghai Composite Index dived 1.56 percent while the benchmark
Philippine stock exchange index opened down nearly four percent.

Driving the
declines was a ferocious sell-off in the oil markets sparked by top exporter
Saudi Arabia slashing prices — in some cases to unprecedented levels — after
a bust-up with Russia over oil production.

The two main
oil contracts were both down about 20 percent in morning Asian trade, with West
Texas Intermediate sliding to around $32 a barrel and Brent crude to $36 a
barrel.

The foreign
exchange markets were also extremely volatile, with traders snapping up the
yen, seen as a hedge against global instability and selling off the dollar amid
uncertainty over coronavirus in the United States.

A stronger
yen tends to push down Japanese stocks, and exporters from the world’s
third-top economy were especially hard-hit, with Nissan and Sony down more than
five percent and Toyota down 3.60 percent.

Banks also
plunged, with Sumitomo Mitsui Financial trading down nearly four percent and
Mitsubishi UFJ Financial off by almost five percent.

Stephen
Innes, chief market strategist at AxiCo, said the markets were suffering from a
perfect storm of factors.

The dollar
fetched 104.15 yen in early Tokyo time, after dipping to around 103.83 yen in
Sydney time, the lowest level since November 2016. That compares with 105.40
yen in New York late Friday.

Markets were
not helped by data showing that the Japanese economy had declined more than
initially thought — even before the outbreak of the coronavirus.