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US trading halted as shares plunge around the world US trading halted as shares plunge around the world
(about 1 hour later)
Trading in US shares was briefly suspended after sharp falls led to an automatic halt in the selling and buying of stocks.Trading in US shares was briefly suspended after sharp falls led to an automatic halt in the selling and buying of stocks.
Once trading resumed, the three major US stock indexes were down over 6%.Once trading resumed, the three major US stock indexes were down over 6%.
The move follows dramatic falls globally with shares facing the worst day since the 2008 financial crisis.The move follows dramatic falls globally with shares facing the worst day since the 2008 financial crisis.
A row between Russia and Saudi Arabia saw oil prices plunge by 20%, hitting markets already reeling from fears of the impact of the coronavirus.A row between Russia and Saudi Arabia saw oil prices plunge by 20%, hitting markets already reeling from fears of the impact of the coronavirus.
The day has been dubbed "Black Monday" by analysts who described the market reaction as "utter carnage".The day has been dubbed "Black Monday" by analysts who described the market reaction as "utter carnage".
Trading on the top three indexes in the US were halted for 15 minutes. When trading resumed 15 minutes later, shares continued to fall, before appearing to stabilise.Trading on the top three indexes in the US were halted for 15 minutes. When trading resumed 15 minutes later, shares continued to fall, before appearing to stabilise.
The current system was put in place in 2013. Today is the first time a halt has been triggered under the current rules. The current system was put in place in 2013. This is the first time a stop has been triggered under the current rules.
In US markets:
The oil price fell nearly 30% to $31.14 on Monday, its biggest single-day fall since the start of the first Gulf war in 1991, before recovering slightly to trade 20% lower.The oil price fell nearly 30% to $31.14 on Monday, its biggest single-day fall since the start of the first Gulf war in 1991, before recovering slightly to trade 20% lower.
"It shows a level of nervousness in the market which I haven't seen in a long time," said Justin Urquhart-Stewart, co-founder of Seven Investment Management."It shows a level of nervousness in the market which I haven't seen in a long time," said Justin Urquhart-Stewart, co-founder of Seven Investment Management.
Investors are selling stocks at such a rate because they cannot quantify what Saudi Arabia and Russia might do, he said.Investors are selling stocks at such a rate because they cannot quantify what Saudi Arabia and Russia might do, he said.
The UK falls came after stock markets around the world saw dramatic falls. In Europe, the main stock market indexes in France, Germany and Spain were all trading over 7% lower. Norway - a major oil exporter - saw its main stock exchange fall over 12%. The UK falls came as stock markets around the world saw dramatic falls. In Europe, the main stock market indexes in France, Germany and Spain were all trading over 7% lower.
Among the fallers:Among the fallers:
Among the winners: Elsewhere on the markets, the price of gold hit a seven-year high, trading at $1,700 per ounce. Gold is often seen as a desirable asset to hold in times of uncertainty.
And in a historic moment, the price on benchmark UK government bonds for two-, three-, four-, six- and seven-year maturities rose so high that yields - or the rate of return on the bond - briefly turned negative for the first time. A negative yield means investors will lose money from holding the bond.
Earlier on Monday, Asian stock markets had also fallen sharply, with Japan's Nikkei 225 index down 5% while Australia's ASX 200 slumped 7.3% - its biggest daily drop since 2008.Earlier on Monday, Asian stock markets had also fallen sharply, with Japan's Nikkei 225 index down 5% while Australia's ASX 200 slumped 7.3% - its biggest daily drop since 2008.
In China, the benchmark Shanghai Composite fell 3%, while in Hong Kong, the Hang Seng index sank 4.2%.In China, the benchmark Shanghai Composite fell 3%, while in Hong Kong, the Hang Seng index sank 4.2%.
As well as the slump in the oil price, Asian investors also reacted to a steep fall in Chinese exports, and figures showing the Japanese economy shrinking at a faster pace than expected.
Why should I care if stock markets fall?Why should I care if stock markets fall?
Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.Many people's initial reaction to "the markets" is that they are not directly affected, because they do not invest money.
Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.Yet there are millions of people with a pension - either private or through work - who will see their savings (in what is known as a defined contribution pension) invested by pension schemes. The value of their savings pot is influenced by the performance of these investments.
Pension savers mostly let experts choose where to invest this money to help it grow. Widespread falls in share prices are likely to be bad news for pension savers.Pension savers mostly let experts choose where to invest this money to help it grow. Widespread falls in share prices are likely to be bad news for pension savers.
As much as £600bn is held in defined contribution pensions at the moment.As much as £600bn is held in defined contribution pensions at the moment.
So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.So big rises or falls can affect your pension, but the advice is to remember that pension savings, like any investments, are usually a long-term bet.
Read more here.Read more here.
'Political poker''Political poker'
The price of oil had already fallen sharply this year as the coronavirus disease began to spread internationally, with demand for fuel expected to decline.The price of oil had already fallen sharply this year as the coronavirus disease began to spread internationally, with demand for fuel expected to decline.
Last week, oil exporters' group Opec - which includes Saudi Arabia - agreed to cut production in order to support prices.Last week, oil exporters' group Opec - which includes Saudi Arabia - agreed to cut production in order to support prices.
However, it also wanted non-Opec oil producers such as Russia to agree to cuts, and on Friday Russia rejected the plans.However, it also wanted non-Opec oil producers such as Russia to agree to cuts, and on Friday Russia rejected the plans.
In response, Saudi Arabia has cut its official selling prices for oil and plans to increase production. The move is seen as Saudi Arabia flexing its muscles in the oil market to make Russia fall into line.In response, Saudi Arabia has cut its official selling prices for oil and plans to increase production. The move is seen as Saudi Arabia flexing its muscles in the oil market to make Russia fall into line.
Michelle Wiese Bockmann, commodities analyst and editor for Lloyd's List, said that the oil market has changed over the past few years and Saudi Arabia is scrambling to maintain its position in the market. Michelle Wiese Bockmann, commodities analyst and editor for Lloyd's List, said that the oil market has changed over the past few years and Saudi Arabia was scrambling to maintain its position in the market.
While cuts in production from Venezuela, Iran and Libya should have sent prices up, the US and its massive reserves of shale oil have stepped in at every turn, depressing prices.While cuts in production from Venezuela, Iran and Libya should have sent prices up, the US and its massive reserves of shale oil have stepped in at every turn, depressing prices.
"It's already a very volatile situation," she said."It's already a very volatile situation," she said.
Mr Urquhart-Stewart said the market has "gone from an issue over economic demand into more of a political game of poker".
Given that Saudi Arabia has some of the lowest costs of production, they can send prices down a long way before having to relent, he added.
AnalysisAnalysis
by Andrew Walker, World Service Economics Correspondentby Andrew Walker, World Service Economics Correspondent
The price of crude oil is about half the level it hit in early January.The price of crude oil is about half the level it hit in early January.
The root cause of that is the coronavirus. It has hit demand for oil and some of the big exporters have been trying to stabilise its price.The root cause of that is the coronavirus. It has hit demand for oil and some of the big exporters have been trying to stabilise its price.
Last week a group of them discussed production cuts.Last week a group of them discussed production cuts.
But the biggest producer among them, Russia refused and the oil price fell further.But the biggest producer among them, Russia refused and the oil price fell further.
Then at the weekend, Saudi Arabia, the biggest of the producers that were pressing Russia to agree output cuts, announced it would increase supplies and offered discounts to its buyers. That sent the oil price into freefall.Then at the weekend, Saudi Arabia, the biggest of the producers that were pressing Russia to agree output cuts, announced it would increase supplies and offered discounts to its buyers. That sent the oil price into freefall.
That in turn undermined stock markets, although it wasn't the only factor. The lower oil price is a problem for the credit markets.That in turn undermined stock markets, although it wasn't the only factor. The lower oil price is a problem for the credit markets.
Many American shale producers are likely to be unviable and they have borrowed in the high risk debt market, issuing what are called junk bonds. So there is the potential for losses for investors who hold those bonds.Many American shale producers are likely to be unviable and they have borrowed in the high risk debt market, issuing what are called junk bonds. So there is the potential for losses for investors who hold those bonds.
Cheaper oil is obviously a benefit for users. Airlines have been hit by a decline in bookings, but cheaper fuel will offset that a little. And in time, there will be an impact on the price that motorists pay, although in many countries, including Britain, tax accounts for most of what they pay.Cheaper oil is obviously a benefit for users. Airlines have been hit by a decline in bookings, but cheaper fuel will offset that a little. And in time, there will be an impact on the price that motorists pay, although in many countries, including Britain, tax accounts for most of what they pay.