Market sentiment is souring this morning as evidence of economic damage caused by virus containment measures mounts. In US trading, crude oil prices plunged, and the futures price fell below zero for the first time ever as the industry runs out of storage capacity. Locally, airline Virgin Australia entered voluntary liquidation, following on from a Canadian oil giant’s cancellation of its takeover bid for Caltex yesterday.

Traders fear being caught long oil as the May futures contract for West Texas Intermediate approaches expiry. Last night the price plunged from US$15 a barrel to touch a low point near minus $40. This is the first time that oil prices traded below zero, and the prospect of having to pay to sell crude oil provided a brutal reminder of the current unusual economic conditions.

Macro data reported over the last 24 hours added to the gloom. UK house prices fell, and Japanese exports plummeted 11.7% in March. German PPI was even more negative than expected, recording a fall of 0.8% for the month.

One of the biggest surprises is the lack of reaction in currency markets. Despite higher volatility in commodity and share markets, major forex pairs are largely unmoved and trading ranges overnight were tiny. Traders are arguing the significance of this lack of movement. Have foreign exchange markets already priced the disruption? Are they frozen? Is there an implosion or explosion to come?

Corporate news is adding to the negativity. Virgin Australia failed to attract sufficient support to remain viable. ABN Amro moved to secure assets of Singapore’s Hin Leong Trading as the oil trader revealed around US $800 million in futures losses. National Australia Bank announced a $1.1 billion hit to first half earnings as it took writedowns across the board. BHP stood out with its relatively benign quarterly earnings report this morning.

Share futures for the Asia Pacific region fell overnight. The Hang Seng is down 197, the Straits Times index down 17. The Nikkei and Australia 200 indices are tipped to open 320 and 53 points respectively. The stacking of bad economic news could see the markets exceed these early negative indications.