Chinanews client Beijing, March 10th (Reporter Cheng Chunyu) The largest intraday drop in the history of U.S. WTI crude oil futures, the rare triggering of a fuse mechanism for U.S. stocks, the "upper limit" of U.S. Treasury futures, and more than half of the world's important stock market indexes have fallen over 6%, March 9, 2020, destined to become a day worth recording in the history of global financial markets.

Data Map: New York Stock Exchange.

make a record

——The biggest intraday drop in crude oil futures

After the Organization of the Petroleum Exporting Countries (OPEC) failed to reach an agreement with oil-producing countries to reduce production, Saudi Arabia ’s sharp cut in oil prices led to a sharp drop in international oil prices. Brent crude oil futures tumbled 30% to 31.02 US dollars / barrel in early trading, the lowest level since February 2016; U.S. WTI crude oil also tumbled 27% in early trading, and once fell more than 33% during the session to 27.34 US dollars, refreshing The biggest single-day drop in history.

——U.S. Stocks rarely trigger the fuse mechanism

U.S. stocks plunged at the opening of the market. At the beginning of the trading session, the S & P 500 index once fell 7%, triggering the first layer of fuse mechanism, which caused U.S. stocks to suspend trading for 15 minutes. This is the first time that US stocks have melted due to the plunge since the 2008 financial crisis. There are even media reports that this is the second real meltdown in the history of US stocks. The last real meltdown in US stocks was on October 27, 1997.

——More than half of important stock indexes have fallen by more than 6%

According to Wind statistics, among the 16 major global stock market indexes, on the 9th, in addition to the three major US indexes, Britain's FTSE 100, Germany's DAX, France's CAC40, Nikkei 225, and Australia's S & P 200, etc., a total of 9 indexes fell intraday. , And even closed down more than 6% on the day. The three major European stock indexes fell more than 8% during the session. The latter was the Shanghai Stock Exchange Index, which fell about 3%.

——U.S. Treasury futures “upper limit”, yields hit a record low

Under safe-haven demand, the influx of large amounts of funds caused the 10-year Treasury futures in the United States to reach the upper limit and caused a short interruption in trading. The 10-year Treasury yield fell to 0.318%, a record low, and the intraday Japanese price fell nearly 40%; 30 years US Treasury bonds once fell to 0.702%, continuing to hit a record low, with a daily decline of nearly 30%. Moreover, as a leading indicator of the economic recession, the 3-month and 10-year Treasury bond yield curve was once inverted, raising alarms of panic.

——Gold price returns to $ 1700 / ounce after 8 years

After the sell-off of crude oil and the stock market, investors flocked to safe-haven assets including precious metal gold. On the 9th, the international gold futures price exceeded the $ 1,700 / ounce mark, the highest since December 2012.

Data map

fuse

——The crude oil price war suddenly started after 6 years

Affected by the new crown pneumonia epidemic and other factors, U.S. stocks have continued to plunge. In view of the evolving risks to economic activity, the Federal Reserve has cut interest rates sharply by 50 basis points on the 3rd. Subsequently, U.S. stocks fluctuated widely and staged a roller coaster market last week.

"Saudi Arabia started a crude oil price war over the weekend as the cause of the 9-day plunge in global financial markets." According to foreign media reports, Russia refused to reduce output at the OPEC + (OPEC +) policy meeting on March 6. OPEC and its oil-producing ally failed to reach an agreement. Any production reduction agreement means that starting from April, OPEC-related oil producing countries may completely liberalize production restrictions.

On March 7 (Saturday), OPEC's main country, Saudi Arabia, sharply reduced the price of crude oil sold to foreign markets such as Europe, the Far East, and the United States. The discount rate was the largest in more than 20 years to attract foreign refineries to purchase Saudi crude oil. The Saudi side also said that if the market needs it, it can reach output of 12 million barrels per day.

The market generally believes that after a lapse of six years, Saudi Arabia took the initiative to start a crude oil price war, which exceeded market expectations. Previously, many financial analysts had predicted that OPEC would cut production further to boost oil prices.

On the 9th, US President Trump tweeted to appease the panic market. It said that Saudi Arabia's dispute with Russia over oil prices and production, and fake news spread by political opponents, caused the stock market to fall that day, and the decline in gasoline prices was also a good thing for ordinary consumers.

Chris Rupkey, an economist at Mitsubishi UFJ Financial, said: "The plan to lower oil prices will allow more cash flow to people's hands, which will boost consumer spending and boost the economy, but the move does not seem to The stock market's blow to investors has not been eased. The Wall Street woes could have a negative impact on the economy. "

"The plunge in oil prices has once again exacerbated market vulnerabilities," Jason Daw, head of Asia-Pacific foreign exchange strategy at Commerzbank said to the media. "The longer the global epidemic lasts, the greater the risk of a full-blown crisis."

Market outlook

-Will crude oil prices continue to fall?

On the 9th, international oil prices plummeted, falling by over 30% at one time, refreshing the largest intraday drop in history. NYMEX crude oil futures closed down 26.74% to 30.24 US dollars / barrel, the lowest since February 2016; Brent crude oil futures fell 26.24% to 33.39 US dollars / barrel, both creating the largest one-day drop since the 1991 Gulf War.

As of press time, the price of crude oil and other energy and chemical futures rose or fell.

Goldman Sachs analysts said in the latest report that the price of Brent crude could drop as low as $ 20 per barrel, which will test some oil producers. "The price war has completely changed the outlook for the oil and gas market. Goldman Sachs lowered its oil price forecasts for the second and third quarters to $ 30 a barrel."

Hong Ye, Managing Director and Head of Research of Bank of Communications International believes that the impact of the oil crisis will first be reflected in the plunge in the price of US junk bonds, rising risks to the stability of the financial system, and rising deflationary expectations, which will increase the difficulty of monetary policy.

However, in the view of Jin Jiarui, a senior analyst of Jinlianchuang Crude Oil, this fall in oil prices will not become a long-term trend like the 2014 oil price crash. Saudi Arabia ’s behavior is to force Russia to continue cooperation with OPEC. It is expected that once the price of oil drops to a level that Russia itself does not feel it can afford, it is likely to restart the production reduction agreement.

A recent report from Everbright Securities argues that Saudi Arabia ’s special alliance with the United States means that the United States will have difficulty accepting the prospect of a continued slump in oil prices due to a Saudi price war. Therefore, the current plunge in oil prices is unsustainable, and there may be variables in the future.

Xi Jiarui said, "The next production reduction meeting is on June 9, Saudi Arabia and Russia are likely to jointly reduce production again, at which time oil prices may show a retaliatory rebound."

On the 9th, the main stock indexes of the European and American stock markets fell.

-European and American stock markets enter a technical bear market?

As of the close of the 9th, the Dow Jones index plummeted by more than 2,000 points, closing down 7.79%, the largest one-day drop since 2008; the S & P 500 index fell 7.60%, and the Nasdaq index fell 7.29%. Oil stocks fell sharply, Chevron fell more than 15%, leading the Dow. At this point, the Dow has fallen by 19.34% compared with the historical high set by this round of bull market.

On the same day, the main European stock indexes closed down across the board, and several stock indexes entered a technical bear market. The British FTSE 100 index fell 7.69%, the French CAC40 index closed 8.39%, and the German DAX index fell 7.94%. Among them, the German DAX index, the French CAC40 index, the Italian FTSE MIB index, the European Stoxx 50 index and the British FTSE 100 index entered a technical bear market.

Yang Delong, chief economist of Qianhai Open Source Fund, pointed out that after the peak of U.S. stocks, there will be a sharp decline. According to the experience of U.S. stocks, the 20% drop is generally called the bull-bear dividing line. The trend confirms that it will fall further by 20%.

Xie Feng, a researcher at the Bank of China Research Institute, believes that the current US corporate sector debt level is high and the quality of household debt has deteriorated. Once the economic slowdown exceeds expectations, corporate profits will decline further, and residents ’wealth will also be damaged, which may trigger more financial markets. Risk release.

The main performance of A-share stock indexes closed on the 9th.

——Can Chinese A-shares stand alone?

On the 9th, among the major global stock indexes, the overall decline of A shares was lower. The Shanghai Composite Index fell 3.01%, the Shenzhen Stock Exchange Index fell 4.09%, and the GEM Index fell 4.55%. The turnover of the two cities exceeded one trillion yuan throughout the day. Net outflow of funds from the Shanghai Stock Exchange to Beijing's Shanghai Stock Exchange was 9.671 billion, and that of Shenzhen Stock Exchange was 4.648 billion.

So Lee Securities Chief Economist Chen Li said in an interview with the media that the main reason for the downturn in the A-shares on the 9th was due to the sharp fluctuations in the global capital market. The sharp fluctuations in the external markets have caused domestic investors' concerns. The turnover of the two cities exceeded one trillion yuan in a row, indicating that the funds are very different. Some funds are leaving the market and some funds are considered to be bargaining opportunities.

It is worth noting that on the 9th, the FTSE China A50 index futures index, which is the leading indicator of the secondary market of the stock market, rebounded and turned red at night, and now rose more than 1%. It once opened nearly 2%, and once fell more than 1%.

"The fundamental reason for the plunge in U.S. stocks is that the valuation is too expensive." Everbright Securities believes that A-shares are more immune to overseas fluctuations. Under the analysis framework of the policy economic cycle, it is not only economic data that determines the market trend, but also policy tightening. Oil prices fell sharply more than expected, reducing the risk of recent stagflation and broadening the scope for domestic policy easing.

Great Wall Securities believes that under the background of global risk assets being sold out of funds, the short-term gains in the A-share market are facing emotional selling pressure. Looking at the medium-term impact, China's securities market has shown very obvious value resilience against the backdrop of a global downturn, and RMB assets are expected to become a safe haven for global funds. (Finish)