Equity markets collapsed Monday as the rapidly spreading coronavirus fans fears over the global economy, while a crash in oil prices added to the panic with energy firms taking a hammering and wiping hundreds of billions off valuations.
Stock markets in the energy-rich Gulf states nosedived at the start of trading Monday after oil prices crashed amid a price war after oil producers failed to reach an agreement.
Trading at the Pakistan Stock Exchange (PSX) halted for 45 minutes on Monday after the benchmark index fell 2,106 points soon after opening.
The market sources said trading was paused around 9:40am after a sharp 5.83 per cent decline in share prices. As per the bourse rules, if the KSE-30 index falls 4pc or more, trading is halted for 45 minutes.
According to the Security and Exchange Commission of Pakistan (SECP), the move provided an opportunity for the listed companies to earn their profit. The rule was introduced a few months back to deal with such a panic situation.
"It also gives companies and investors a cooling period to settle down. After margins have been collected successfully, trading session is resumed."
The regulator said, “The SECP is monitoring the situation to ensure fair and transparent trading.”
After the initial dip of 2,106 points that forced the pause in trading, the market recovered a bit after the resumption and the loss reduced to 1,381 points.
Oil war and deepest dip in prices
Oil prices plunged by almost a third Monday, the biggest drop since the 1991 Gulf War, as top exporter Saudi Arabia launched a price war after Russia blocked a bid to cut output.
In ferocious trading, both main crude contracts nosedived following Riyadh's shock move to slash prices after the alliance between oil-exporting group OPEC and its partners fell apart.
At a meeting last week, Saudi Arabia led a push by OPEC ministers to reduce output to counter the impact of the coronavirus outbreak -- but it hinged on agreement from the group's allies, foremost among them Moscow.
However Russia, the world's second-largest oil producer, refused to tighten supply -- and Riyadh then drove through the biggest cuts to prices in 20 years on Sunday, unleashing pandemonium on crude markets.
Saudi equities tanked more than nine percent in response with oil titan Aramco losing 10 percent.
The Russian ruble on Monday tumbled to a four-year low amid a crash in oil prices following a collapse of talks between OPEC leader Saudi Arabia and Moscow.
The ruble fell by over 7 percent to trade at nearly 74 to the US dollar, a rate last seen in early 2016.
Impact on other Gulf markets
Kuwait's Premier index tumbled 9.5 percent and trading was temporarily suspended, while the All-Shares Index lost 8.7 percent.
Dubai Financial Market dropped 9.0 percent to its worst level in seven years but authorities suspended trading in most leading stocks after slumping the maximum daily limit of 10 percent.
Abu Dhabi Securities Exchange shed 7.7 percent to a four-year low, while the Qatar Stock Exchange was down 8.2 percent.
The tiny bourses of Oman and Bahrain dipped 3.3 percent and 3.0 percent, respectively.
The seven bourses were battered on Sunday, the first trading day of the week, shedding tens of billions of dollars from their values, with Saudi Arabia, the leading bourse in the region, tumbling by 8.3 percent.
Oil prices crashed at the opening on Monday with the benchmark Brent crude diving to $33 a barrel.
The crash in oil, the mainstay of public revenues in the region, added to the panic that the ongoing price war may continue for a long time.
As the deadly coronavirus disease claims more lives around the world, dealers are fleeing out of riskier assets and into safe havens, sending gold and the yen surging and pushing US Treasury yields to new record lows.
Asian Markets
As the deadly disease claims more lives around the world, dealers are fleeing out of riskier assets and into safe havens, sending gold and the yen surging and pushing US Treasury yields to new record lows.
While governments and central banks have unleashed or prepared to roll out stimulus measures, the spread of COVID-19 is putting a huge strain on economies and stoking concerns of a worldwide recession.
Trading floors were a sea of red, with Tokyo and Manila plunging more than five percent, while Hong Kong dived 3.6 percent. Sydney shed 7.3 percent.
Mumbai, Taipei, Singapore, Seoul, Jakarta and Wellington were more than three percent down, Shanghai shed 2.5 percent and Bangkok gave up 6.8 percent. The losses tracked sharp falls in Europe and Wall Street on Friday.
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 production.
Both main oil contracts -- which had already been under pressure over falling demand caused by the virus -- dived around 30 percent, marking the worst drop since the 1991 Gulf War and the second biggest fall on record, according to Bloomberg News.
Saudi Arabia launched an all-out oil war Sunday with the biggest cut in its prices in the past 20 years, Bloomberg News reported, after OPEC and its allies failed to clinch a deal to reduce output.
A meeting of main producers was expected to agree to deeper cuts to counter the impact of the coronavirus -- but Moscow refused to tighten supply.
In response, Riyadh slashed its price for April delivery by $4-$6 a barrel to Asia and $7 to the United States.
Russia's decision not to comply had already battered prices and there are warnings they could continue to drive lower towards $20 if the two sides do not reach an agreement.
"Something like this could have more global repercussions than a trade war between China and the US because oil touches so many things in the world economy," said Rohitesh Dhawan, director of energy, climate and resources at Eurasia Group in London.
Australian stocks
Australian stocks plunged more than seven percent Monday, wiping $88 billion off the market in its worst day since the global financial crisis on fears over the spread of the coronavirus and diving oil prices.
The benchmark ASX 200 dropped 7.33 percent, or 455.60 points, to close at 5,760.60.
Coronavirus has had a limited impact in Australia, but the country's economy is seen as closely integrated with both the United States and China -- two hotspots for the disease.
The losses have brought the market back to its lowest level since January 2019, and come amid analyst predictions the country is poised to fall into recession for the first time in three decades.
The Australian dollar has shed more than seven percent of its value against the US dollar since the beginning of the year.
Australia's central bank last week slashed interest rates to a record low of 0.50 percent in an effort to stave off the impact of COVID-19, while the government has said it will finalise a multibillion-dollar economic stimulus package in the coming days.
Monday brought the steepest fall for the Australian share market since October 2008, with major energy producers worst-hit amid a crash in global oil prices.