All Asset Classes Sold As Sterling Lowest Since 1985, Oil Reaches Double Decade Low

The global market sell off continues as investors shun everything except USD (UUP), moving into cash positions. The greenback gained against all other currencies, with Sterling (FXB) at a 30+ year low against its US counterpart. Stimulus continues to be poured in as governments scramble to throw everything they have at reducing the impact of the coronavirus outbreak. 

In Europe, the ECB announced a €750bn emergency coronavirus package to buy government and company debt across the Eurozone (EZU). Dubbed the “Pandemic Emergency Purchase Programme” bank boss Christine Lagarde said there were no limits to what the European Central Bank would do to defend the euro, but it remains to be seen if it will further quell wider turmoil.

Oil (OIL) bounced back 13% this morning, although yesterday saw it fall to almost $20 a barrel to hit its lowest price in almost two decades as stocks and bonds sold off in tandem. Investors even fled traditional safe havens such as US Treasuries and gold (GLD), with the latter falling below $1,500 an ounce, down from more than $1,600 a week ago. This marks a new phase of the bear market, as so far heavy stock sell-offs have been accompanied by investors piling into Treasuries, sending yields tumbling. 

Fresh oil price pain sent energy firms reeling; in the US Chevron sank 22%, while in the UK both BP and Royal Dutch Shell fell double digits. One Wall Street analyst, Paul Sankey of Mizuho Securities, claimed that oil could go much lower from here — even below $0 a barrel. His thesis is that oil comes with storage costs, and if the economic impact of the current pandemic crushes oil demand, producers could theoretically pay customers to take it off their hands. Sankey’s viewpoint is an extreme one, but he is not the only analyst warning that, with tumbling demand and OPEC’s product limit deal with Russia in tatters, surplus oil could become a major issue. In other pandemic news, General Motors (GM), Ford (F) and Fiat Chrysler (FCA) all announced they will close their factories, with GM and Ford reportedly in talks to utilise the empty production lines to make ventilators. Meanwhile, Starbucks (SBUX) set out to reassure investors, with CEO Kevin Johnson telling shareholders in a meeting that the protocols it used to combat the virus in China will work elsewhere.

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