BANGKOK (AP) — World share prices skidded Tuesday after the price of U.S. crude oil plunged below zero, with demand collapsing as the pandemic leaves factories, automobiles and airplanes idled.
Germany’s DAX lost 2.2% to 10,443.42 in early trading and the CAC 40 in France shed 2.4% to 4,420.53. Britain’s FTSE 100 declined 1.5% to 5,724.68.
Wall Street looked set for losses, with the future contract for the S&P 500 down 0.6%, while the contract for the Dow industrials lost 1%.
While share prices have gradually stabilized after wild swings earlier this year, uncertainty over growing numbers of coronavirus cases in Japan and in some Southeast Asian countries has left investors wary.
Unconfirmed reports Tuesday that North Korean leader Kim Jong Un was in fragile condition after surgery added to the jitters. But South Korea’s government said Kim appeared to be handling state affairs as usual.
Overhanging the markets has been the plunging price of crude oil as a growing glut pushes storage capacity to its limits. As of early Tuesday, the cost to have a barrel of U.S. crude delivered in May was at negative 2.58 per barrel.
That was still an improvement over the U.S. benchmark’s settlement at negative $37.63 per barrel on Monday. Traders are still paying about $20 per barrel for U.S. oil to be delivered in June. Analysts consider that to be closer to the “true” price of oil.
The tumult in the oil market mirrors volatility in many others and reflects uncertainty over where the world economy will head as governments begin to loosen controls imposed to contain the coronavirus.
“We could merely be in the eye of the hurricane as the epicenters of its rage remain centered around demand devastation and crude oil oversupply,” Stephen Innes of AxiCorp. said in a commentary.
“At a minimum, oil prices will be the last asset class to recover from lockdown” and only when travel restrictions are lifted, he said.
When trading of contracts for U.S. oil to be delivered in May expire on Tuesday, the earliest delivery available will be for June.
On Tuesday, it was down 28 cents at $20.15 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, dropped $2.91 to $22.66. It fell nearly 9% on Monday to $25.57 per barrel.
“The historic drop in WTI prices is an indication of the downward pressure which many other crude oil grades could face, given the oversupply situation,” Sushant Gupta of Wood Mackenzie said in a report.
On the bright side, given the very low prices right now, “It also provides an opportunity for large consuming nations in Asia such as China and India to expedite filling up their petroleum reserves.”
Gupta said India, for example, still has up to 13 million barrels of spare capacity out of a total of 39 million barrels of storage capacity.
In share trading, Tokyo’s Nikkei 225 fell 2% Tuesday to 19,280.78 while the Hang Seng index in Hong Kong lost 2.2% to 23,793.55. South Korea’s Kospi slipped 1%, to 1,879.38.
Australia’s S&P/ASX 200 fell 2.5% to 5,221.30 and the Shanghai Composite index gave up 0.9% to 2,827.01.
In a sign of continued caution in the market, Treasury yields remained extremely low. The yield on the 10-year Treasury slipped to 0.61% from 0.62% late Monday.
In currency trading, the dollar rose to 107.80 Japanese yen from 107.63 on Monday. The euro fell to $1.0825 from $1.0862.
Stocks have been on a general upward swing recently, buoyed by promises of massive aid for the economy and markets by the Federal Reserve and U.S. government.
More recently, countries around the world have tentatively eased up on business-shutdown restrictions meant to slow the spread of the virus, which has killed more than 170,000 people and infected more than 2.4 million.
Health experts warn the pandemic is far from over and new flareups could ignite if governments allow a premature rush to ”normal” life. Many analysts also say some of the recent rally for stocks is based on overly optimistic expectations for a fast economic rebound once shutdowns end.