As reported by CNN, Global stocks are falling and bond yields are sinking after the implosion of a critical oil alliance caused crude prices to crash to historic lows.S&P 500 (SPX) futures plunged as much as 5% Sunday evening, triggering a limit that prevents futures from trading below that mark. Dow (INDU) futures fell more than 1,200 points, or about 4.7%. Nasdaq Composite (COMP) futures were down 4.8%.The sell-off carried over into Asia Pacific, where Australia’s S&P/ASX 200 ended 7.3% lower on Monday, the index’s biggest plunge since October 2008. Japan’s Nikkei 225 (N225) sank 5.1% to its lowest close in more than a year. South Korea’s Kospi (KOSPI) fell 4.2%, its biggest loss since October 2018.Hong Kong’s Hang Seng (HSI) lost 3.5% in afternoon trading, setting the index up for its biggest decline in more than a year. China’s Shanghai Composite (SHCOMP) was the best performer among major indexes in Asia — and even then was still down 2.9%.Parts of financial markets are pricing in a global recessionThe yield on the 10-year Treasury note, meanwhile, fell below 0.5%, hitting record lows.The panic began after Saudi Arabia shocked oil markets by launching a price war against onetime ally Russia. The Saudi kingdom is pressuring the country and trying to retake market share after Russia refused to go along with OPEC’s efforts to rescue the coronavirus-battered oil market by cutting production.US oil prices crashed 27% overnight and were last trading at $30.04 a barrel, while the global benchmark Brent crude was down 26%, trading at $33.28 a barrel. Both oil contracts are on track for their worst day since 1991, according to Refinitiv. Making matters worse, the novel coronavirus continues to weigh heavily on investors as it deals an unexpected shock to the economy. The virus has infected more than 108,000 people and is throwing many countries into turmoil. Italy placed nearly 16 million people under lockdown amid a growing Europe-wide outbreak.
Investors are waking up “shell shocked,” wrote Stephen Innes, chief market strategist at AxiCorp, in a Monday research note. He described the panic as “complete pandemonium.”The one-two punch of Saudi Arabia’s oil price war and the deepening coronavirus fears in Europe added “another level of unwanted panic to a market already thick with fear,” Innes said, noting that investors have begun piling into safe haven assets. The Japanese yen surged against the US dollar to its strongest level in more than three years, while gold briefly traded above $1,700 per ounce and hit its highest levels since 2012.Wall Street has faced heavy losses for the past several weeks due to fears surrounding the coronavirus. During the last week of February, US stocks had their worst week since the financial crisis, and the economic disruption caused by the virus doesn’t appear to be letting up.Global markets have also been battered in recent days. About $9 trillion was wiped off global stocks in nine days, Bank of America said in a research note after US markets closed deep in the red again on Thursday.Innes warned that the oil market could remain under pressure for the foreseeable future. And he said it seems inevitable that US cases of the coronavirus will keep climbing, “possibly in an explosive way” once testing is rolled out on a large scale.The scale of the coronavirus outbreak spread rapidly in the United States last week. At least 33 states now have cases of the virus, and many major US companies have begun encouraging or allowing employees to work from home.