China Futures Crash, Oil & Yuan Plunge As CoV-Contagion Spreads

Update (2020ET): China's FTSE A50 Futures have collapsed over 5% in early trading and Hong Kong's Hang Seng is collapsing...

Source: Bloomberg

And Treasury yields are plunging...

Source: Bloomberg

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While gold is spiking higher and stocks are getting hammered lower after a weekend of ugly headlines surrounding the lethality and spread of the novel coronovirus, the Saudis are desperately talking down the crash in crude oil prices...

Brent is back below $60 and WTI has crashed to almost a $51 handle...

Saudi Arabia is “closely monitoring” the impact of the coronavirus outbreak on oil markets, but so far sees the crisis having a “very limited impact” on global demand, Energy Minister Prince Abdulaziz bin Salman says in a statement.

Current market impact on oil, “primarily driven by psychological factors and extremely negative expectations adopted by some market participants, despite its very limited impact on global oil demand.”

It seems that "psychological" impact is sending gold higher...

And stocks lower... Dow futures down over 300 points, back below 29,000...

And S&P futures back below the key 3,300 level...

And while cash Treasury markets remain closed, long bond futures are spiking higher (implying around a 7-9bps plunge in yields)...

And Yuan is plunging too...

Source: Bloomberg

We assume futures will all be green by tomorrow's cash open as soothing words and excess liquidity are spread liberally across the so-called markets all night.

But, as we noted earlier, while the headlines may all sound very pessimistic, history has shown that a subsequent market recovery from such events is V-shaped and sudden. How soon that happens though will depend on how long the uncertainty lasts before the outbreak is contained and fears of a global pandemic subside. It’s clear we’re still at least a few days away from that upturn in sentiment, and potentially a few weeks.