World stocks tumble

Global stocks plunged on Monday and prices for crude oil tumbled as much as 33% after Saudi Arabia launched a price war with Russia, sending investors already panicked by the coronavirus fleeing for the safety of bonds and the yen.

Saudi Arabia had stunned markets with plans to raise its production significantly after the collapse of OPEC’s supply cut agreement with Russia, a grab for market share reminiscent of a drive in 2014 that sent prices down by about two thirds. The shock in oil was seismic, with Brent crude futures sliding $12 to $33.20 a barrel in chaotic trade, while U.S. crude shed $11.80 to $29.48.

European markets suffered hefty losses in early trade with London FTSE dropping more than 8%, Frankfurt .GDAXI falling more than 7% and Paris .FCHI almost matching those losses. The pan-regional STOXX 600 tumbled into bear market territory — a drop of more than 20% from recent peaks. Oil stocks suffered massive losses with Tullow down 57% and BP down 27% in early trade.

In Asia, stocks and emerging market currencies with exposure to oil tumbled in volatile trade while the safe-haven yen surged.

Heavy selling was set to continue on Wall Street with U.S. futures hitting their down limit. Investors drove 30-year U.S. bond yields beneath 1% on bets the Federal Reserve would be forced to cut interest rates by at least 75 basis points at its March 18 meeting, after having already delivered an emergency easing last week.

MSCI’s broadest index of AsiaPacific shares outside Japan lost 4.4% in its worst day since August 2015. Japan’s Nikkei .N225 dropped 5.1% and Australia’s commodity-heavy market closed down 7.3%, its biggest daily fall since the 2008 global financial crisis.

The European Central Bank meets on Thursday and will be under intense pressure to act, but rates there are already deeply negative. Urgent action was clearly needed, with data suggesting the global economy toppled into recession this quarter.