By Geoffrey Smith
Investing.com — Markets are capitulating across the world in the face of the coronavirus, with crude oil taking the lead as Russia refuses OPEC’s suggestion that they cut oil production by another 1.5 million barrels a day. The U.S. labor market report for February is due but is likely to be overlooked as too historical, given the markets’ focus on what harm the virus can still do to the world economy. And India’s fourth-largest bank collapsed. Here’s what you need to know in financial markets on Friday, March 6th
1. Oil plunges as Russia says Nyet to OPEC cut
plummeted as Russia reportedly refused to support the Organization of Petroleum Exporting Countries’ proposal to cut crude output by an additional 1.5 million barrels a day.
OPEC had agreed its proposal on Thursday, desperate to bring the global oil market back into balance. Demand has fallen through the first quarter due to the coronavirus outbreak and major agencies now expect no demand growth at all over the year as a whole.
Reuters cited unnamed sources saying that Russia would only agree to extend the current deal on output restraint, arguing that fiscal measures to support demand could still be taken by governments around the world.
By 6:40 AM ET (1140 GMT), futures were down 4.4% at $47.74 a barrel, having earlier hit an intraday low of $47.02. U.S. crude futures were down 4.4% at $43.84.
2. Global stock sell-off continues as bond yields hit record lows
Risk aversion continued undimmed in global markets, pushing the down as much as 23 basis points in the course of the European morning to a new record low of 0.70%.
European stocks shed billions more in market value, with the falling 3.1% to 369.18, the German falling 3.0% and the U.K. falling 2.8%.
The benchmark yield also touched its all-time record low of -0.74% before rebounding.
Asian markets had also fallen heavily, with the Japanese losing 2.7% as the yen continued to soar against the dollar. fell to a seven-month low of 105 before retracing, on ever-stronger expectations of further interest rate cuts from the Federal Reserve that will cut the nominal premium in dollar rates over those of haven currencies.
3. U.S. stocks set to open sharply lower
U.S. stock markets, which led the rest of the world lower with Thursday’s sell-off, are in no mood to reverse course on Friday.
The three major indices are all called to open down over 2%: as of 6:30 AM ET (1130 GMT), the contract was down 586 points of 2.2% while the contract was down 2.6% and the contract was down 2.9%.
The losses come against a backdrop of further steep increases in the number of confirmed coronavirus cases in Europe and Iran.
The number of confirmed cases globally is now over 99,000, while the number of deaths recorded is over 3,300.
4. Payrolls set to be ignored as markets focus on virus developments
It may be the least relevant payrolls report in recent history.
The Bureau of Labor Statistics is due to update the world on the state of the U.S. labor market in February, but the reality is that markets are now solely focused on the spread of the coronavirus and the global policy response to it.
Analysts expect growth to have slowed to 175,000 from 225,000 in January, while are expected to tick up again to 0.3%, having weakened to an 11-month low in January.
Elsewhere overnight, a blistering start to the year for was similarly lost in the growing noise of panic as Europe reported further big jumps in confirmed cases of the virus, making the likelihood of growth-sapping public-health measures all the likelier.
5. India’s no. 4 bank collapses
The Indian rupee weakened to a new all-time low of 74.075 to the dollar after India’s regulators took control of the country’s fourth-largest bank, Yes Bank.
Finance Minister Nirmala Sitharaman pledged that the bank would honor obligations to depositors, but the authorities have limited withdrawals to the equivalent of less than $700 for the present.
The news comes against a backdrop of rising fears that India is ill-equipped to deal with the coronavirus outbreak, given its limited healthcare system and the poor access to water and sanitation in its rural districts in particular.