US stocks finished lower on Monday amid a record crash in oil futures, with a deadlock over potential additional emergency funds for small businesses added to the negative sentiment. The Dow Jones Industrial Average dipped 2.4%, the S&P 500 index lost 1.8%, and the Nasdaq Composite Index shed 1.2%.
West Texas Intermediate crude for May delivery finished down more than 300%, to settle at -$37.63 a barrel on the New York Mercantile Exchange for the first time as crude inventories continue to far outpace demand. As a result, energy stocks were the biggest laggards on Monday.
Asian stocks also declined on Tuesday, digesting the overnight drop in US crude prices. Australia’s S&P/ASX 200 closed 2.46% lower after the Reserve Bank of Australia’s minutes for its April meeting showed the central bank remained committed to supporting jobs, incomes, and businesses amid the coronavirus outbreak. China’s Shanghai Composite was down 0.9%, Hong Kong’s Hang Seng index fell more than 2.0% while in Japan, the Nikkei 225 fell 1.97%.
In Europe, equities opened lower, reacting to the shock of negative oil prices. Against this backdrop, BP, Royal Dutch Shell and Total all retreated by around 4% at the start of the session. In the short term, the selling pressure will likely persist in the markets as WTI June futures are also falling, losing over 11% on the day and hitting a low of $18.00.
On the data front, the April ZEW survey showed that the current situation estimate in Germany came in at -91.5 versus -77.5 expected and -43.1 prior. Meanwhile, expectations index rebounded sharply up to 28.2 versus -42.0 expected by analysts, suggesting investors hope for a recovery from the coronavirus outbreak. However, the recovery process will likely be hard and longstanding anyway.
In currencies, EURUSD made some bullish attempts but failed to regain momentum and turned negative on the day amid the prevailing risk aversion. the pair could threaten the 1.08 handle if the pressure persists in the short term, fueling the safe-haven demand for the dollar. The key immediate resistance remains around 1.09. As long as the prices remain below this level, bearish risks will persist.
