Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets, CFDs, OTC options or any of our other products work and whether you can afford to take the high risk of losing your money.

Things are getting wild

Things are getting wild

28-4-2020 11:50:4528-4-2020 11:45:4928-4-2020 11:41:0028-4-2020 10:14:0128-4-2020 10:08:5028-4-2020 10:03:36A 30% plunge in crude oil price is unprecedented and is sending huge shock-waves across financial markets. The 10-year US treasury yield dived to below 0.5% for the first time and its 30-year yield is under 1%.

US and European futures plunged over 4% during Asia’s trading hours suggesting that a deeper correction is perhaps ahead of us amid Covid-19 fears and the oil crisis.

In the past two decades, we have been through two major oil downturns; the 2008 subprime crisis and the 2016 global slowdown. In both scenarios, crude oil prices had fallen from their peak by over 70%. If we are at the midst of a third major oil downturn, it suggests that oil price could go as far as US$ 18 per barrel should OPEC+ continue with this price war in a time where global demand is badly dampened by Covid-19.

With the market in this freefall, capital preservation will be on top of investors’ minds. Large gap-downs in oil and futures markets may trigger stop-loss orders which reinforces the selloff. We are not yet in a financial crisis but if markets continue to behave in this way, we may end up with one.

The US non-farm payroll in February smashed market forecasts with strong readings. Investors, however, are perhaps looking ahead into March’s reading for clues of Covid-19’s impact. US dollar index extended its losses into 95.66 area, reflecting both a dovish Fed outlook and a weaker fundamental picture of the US.

In Singapore, the Straits Times Index fell 3% at open to 2,868 points. Offshore (Sembcorp Marine -6.7%) banking (DBS -4.6%) and real estate (HK Land -4.28%) were among the worst performing sectors, dragged by oil’s plummet and a rapid spread of coronavirus around the globe.

Crude Oil Brent – Cash (2006-2020)

Background image

Find your flow: four principles for trading in the zone

Learn about the four trading principles of preparation, psychology, strategy, and intuition, and gain key trading insights from some of the world's top investors.

Get this free report
Mobile trading app


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.