Market Massacre: Oil Crashes 30%, Dow Down 1,000, VIX Explodes As Spoos Crater
by Tyler Durden
Sun, 03/08/2020 - 18:28
Following what may have been the most drama-filled weekend since “Lehman Sunday”, in which we saw not only another major spike in covid cases around Europe and the US, but also the total collapse of OPEC after Saudi Arabia unilaterally decided to flood the market with deeply discounted oil in a desperate attempt to crush the competition (yet which may backfire and soon lead to riots in Riyadh), markets are reacting appropriately and just like during Lehman Sunday, everything is crashing:
S&P emini futures are down more than 4% in early trading, plunging as low as 2,845 and fast approaching their limit down price of 2,819 as investors around the world puke risk in an unprecedented fashion.
Dow futures are down more than 1,000 points unwinding all of Friday’s remarkable late-day rally and then some…
VIX futures are up 16%, so one can only imagine where spot will be soon.
Naturally, the oil complex is imploding, with WTI down 27% to $30… … while Brent has dropped as much as 31%, to just $33 in early Sunday trading in what Bloomberg dubbed “one of the most dramatic bouts of selling ever”…
Finally, gold, also known to certain WSJ “experts” as a pet rock, it just spiked above $1,700 for the first time since 2012.
… And with spot VIX likely set to trip 60, the Fed will need to do something or risk another Great Depression.
(Update)
US stock futures just halt trading reaching the 5% down limit, 30Y yield has plunged below 1% and Gold now trading above 1,700.
Both the Japan (Nikkei) and the Aussie market (ASX) has plunged more than 6%.
Regards
James
Deepening Rout in U.S. Stock Futures Triggers Limit Down Rules
Bloomberg News
By Sarah Ponczek
and Lu Wang
March 9, 2020, 6:16 AM GMT+8 Updated on March 9, 2020, 8:07 AM GMT+8
- CME rules stipulate futures can’t fall more than 5% from close
- S&P 500 futures sink as Saudi Arabia wages oil price war
Waves of selling in U.S. stock index futures triggered Chicago Mercantile Exchange limits that prevent declines from surpassing 5% from a closing reference price, as the spreading coronavirus rattled investors and crude oil plunged.
E-mini futures on the S&P 500 Index sank 5% to 2,819 as of 8:05 p.m. in New York, hitting a limit triggered when the measure falls 5% from the price calculated in the last 30 seconds of trading Friday. The curb means the contract can’t trade at a lower price for the remainder of the overnight session, although transactions at or above the threshold are allowed.
“It allows cooler heads to prevail,” JJ Kinahan, chief market strategist at TD Ameritrade, said by phone. “Particularly in the overnight sessions it’s a good thing to have because you just don’t have as many products at work. This is one rule that it’s been so long since we have seen it, but it’s proved effective over time.”
Equities have whipsawed all week in trading as volatile as any time on record as investors assess the threat to the global economy from the spreading coronavirus. Concerted efforts from central banks and governments to soften the blow spurred gains earlier in the week, but the accelerating rise of reported cases raised the specter of a global recession and led to a powerful rally in Treasuries that sent yields to record lows.
The last time futures selling tripped the limit down rule was the night of Nov. 8, 2016, as investors adjusted to news that Donald Trump would win the presidency. The price held at 5% below the prior day’s close around midnight and stayed there for about half an hour before turning higher. It erased the entire drop minutes after the opening of the regular trading.
Nasdaq 100 futures will stop falling if the contract reaches 8,093.25, while the Dow contracts cannot trade below 24,534.
The cash equities market is subject to circuit breakers established by the New York Stock Exchange in the wake of the 1987 Black Monday crash. Trading will halt for 15 minutes if the S&P 500 falls 7% to 2,764.3 at any time before 3:25 p.m. in New York. Another 15-minute pause will happen if losses in the index reaches 13%, a drop that would put it at 2,585.96. If the decline hits 20%, or 2,377.9, markets will close for the day. Only the 20% rule applies in the final 35 minutes of cash trading.
