Markets are panicking
Markets are panicking. Crude oil price plummeted 30% to $34 per barrel on Monday as the coronavirus outbreak is reducing the demand for oil and talks between Russia and OPEC, the oil-producing countries’ cartel, failed to produce an agreement on production cuts. Both blocs fear any production cut would just reduce their market shares. Saudi Arabia even announced a major production increase and a price cut. At $30, US shale oil drilling is no longer profitable and Saudi Arabia is gaining market share. European share markets lost 7% on Monday, one of the biggest daily loses since 2008. U.S. markets lost 8%. The euro lost 6% against the US dollar over the past three weeks.
Euro zone investors confidence plummeted to a 7-year low in March in a survey by Sentix, a German agency. Investors fear a prolonged economic downturn amid the coronavirus outbreak. The agency’s index fell to -17.1 points from 5.2 points in February.
The International Monetary Fund called on national governments to implement “significant and targeted” measures to support economies facing slowdown in the wake of the coronavirus outbreak.