Asian stocks slide as S&P 500 futures shed nearly 5% on oil price crash

Risk-off is in full swing in Asia with Asian markets looking like a sea of red and the S&P 500 futures reporting sharp losses amid a crash in oil prices. 

Scorecard

At press time, the futures on the S&P 500 are down nearly 5 percent and are trading at the lowest level August 2019. The US 10-year yield is trading at record lows below 0.5%, representing a 23 basis point drop on the day. 

Meanwhile, Japan's benchmark index Nikkei is down nearly 6 percent. Other major Asian indices like Hong Kong's Hang Seng, South Korea's Kospi and the Shanghai Composite index are also reporting 2% to 3.5% losses. 

Oil price crash

Oil benchmarks – WTI and Brent – have slipped to four-year lows as Saudi Arabia launched a price war with Russia over the weekend. 

On Saturday, the Kingdom said it will boost production instead of cutting it to arrest the coronavirus-led slide in the equity markets. Saudi Arabia also cut the export price for Asian customers by $6 to $8.

Saudi's dramatic reversal seems like a retaliation aimed at Russia, which refused to join the Organization of the Petroleum Exporting Countries  (OPEC) in a large production cut. The OPEC+ (OPEC and its allies) meeting was held on Friday, where major producers were expected to agree to deeper cuts of 1.5 million barrels per day to counter the effects of the novel coronavirus.

The sell-off oil price sell-off has bolstered the risk-off tone already prevalent in markets due to the outbreak of coronavirus outside China. The virus continues to spread in countries like Italy and South Korea. As per Washington Post, some US officials are worried that the number of confirmed cases will double in the next 48 hours.