Oil shock bloodbath in markets as FTSE loses £125bn

A BLOODBATH stained trading floors across the world yesterday as traders reacted to a huge drop in the price of oil when Riyadh launched the first salvo in an oil price war against Russia.

Almost £125bn was wiped off the value of companies on the FTSE 100 index of the UK’s top firms. And with investors already under pressure from the rapidly spreading coronavirus, the bottom fell out of markets on both sides of the Atlantic.

The FTSE 100 lost 7.7% of its value, losing 496.78 points to end the day at 5,965.77.

The price of international oil standard Brent crude was around 25% down at the end of trading in London on Monday, at $36.20 per barrel. It had rebounded from earlier 35% lows.

Saudi Arabia said it would cut oil prices after it failed to convince Russia to slash production in order to keep prices high.

It led to worries that recession might hit the economy.

“The fears of a recession are so high – investors are effectively assuming it’s a given at this point – that the market’s carcass is mighty unappealing at the moment,” said Connor Campbell, an analyst at Spreadex.

The FTSE’s European cousins, the Paris-based Cac and Germany’s Dax, fell 7.9% and 7.4% respectively.

On the other side of the Atlantic, the Dow Jones fell 6.2% and the S&P 500 fell by 5.9%.

Even gold, which fell 0.24% to $1,669.27 per ounce, was not immune to the turbulence. The precious metal is usually seen as a safe haven against major market fluctuations.

Motorists will be hoping the decision could see petrol forecourts reduce prices by up to 10p a litre.

However, supermarkets are already stretched with coronavirus preparations and it remains unclear how quickly the cuts will be passed on at forecourts.

The Saudis are trying to punish Russia after the two sides failed to agree to supply targets.

Neil Wilson, chief market analyst at Markets.com, said: “This will be remembered as Black Monday. If you thought it couldn’t get any worse than the last fortnight, think again. The blood really is running in the streets, it’s utter carnage out there.

“The oil price shock has totally unnerved investors while Italy’s decision to quarantine 16 million citizens in the north of the country has left markets feeling like the coronavirus outbreak is out of control – where next? The UK is preparing for the worst.”