KEY POINTS

  • Market panic that triggered the rout of the past two weeks looks set to worsen Monday
  • Dow futures imply a massive 1,246.78-point plunge at the opening bell
  • Wall Street is likely looking at a new week worse than the previous two weeks
  • "The sky is falling. Get out, get out while you can," advises MUFG Union Bank
     

It looks like the markets are set to witness another market bloodbath Monday, for the third straight week in a row, amid bleak news of a new oil price war and COVID-19 spreading wider in the United States. Futures tumbled a terribly demoralizing 1,200 points Sunday.

Investors fled en masse into Treasuries and gold as futures on the Dow Jones Industrial Average plummeted a dizzying 1,198 points, implying an opening loss of 1,246.78 points Monday. The S&P 500 futures and Nasdaq-100 futures also point to huge losses on market open.

The benchmark S&P 500 has fallen 8% so far this year, suffering its worst week since the Great Recession of 2008 at the end of February. It's down more than 12% from its recent peak.

The massive declines in the futures market reveal a problem-ridden horizon after an unnerving week that saw the S&P 500 swing up or down more than 2.5% for four days straight.

The yield on the benchmark 10-year Treasury note fell below 0.5% -- a record low -- from 0.7% before seeing a slight recovery, and was last trading at 0.524%. Investors continue to seek safer assets amid additional fears COVID-19 will disrupt global supply chains and plunge the slowing U.S. economy into a recession.

Safe-haven asset gold is now worth $1,700 an ounce, hitting its highest price level since December 2012 -- and looks set to move even higher. On the other hand, copper prices sank to a more-than-three-year-low of $2.46. Copper is seen as a barometer of broad economic demand, given its applications in electrical equipment and manufacturing.

But the catalyst driving this new wave of gloom is the crude price war that has pitted the OPEC against Russia. This price war erupted into the open after Russia on Friday rejected oil production cuts meant to stabilize prices in favor of a grab-as-much-market-share-as-you-can approach.

The international benchmark Brent crude futures plummeted 29.07% to $32.11 per barrel after falling 30% earlier. U.S. West Texas Intermediate (WIT) crude futures dropped 30.98% to $28.49 per barrel.

“The idea that lower gasoline prices is going to put more cash in workers’ pockets and give consumer spending and the economy a boost doesn’t seem to cushion the blow for stock market investors,” said Chris Rupkey, MUFG Union Bank’s chief financial economist. “They want out. Big time. The sky is falling. Get out, get out while you can. Wall Street’s woes have to eventually hit Main Street’s economy hard.”

Wall Street is on track for its second straight rout as US health officials say an outbreak of coronavirus in the country is inevitable Wall Street is on track for its second straight rout as US health officials say an outbreak of coronavirus in the country is inevitable Photo: AFP / Johannes EISELE