The stocks declined worldwide on Tuesday due to the oil prices collapse as well as the uncertainty about the health of North Korea’s dictator. Additionally, the coronavirus pandemic still terrorizes investors. The S&P 500 futures fell by 1.4%, while the Stoxx Europe 600 Index dropped by 2.2%.
U.S. President Donald Trump announced that he’d sign an executive order temporarily suspending immigration into America while the country tries to contain the spread of the coronavirus. Even though the outbreak is slowing in hard-hit areas, authorities fear that the danger hasn’t passed yet.
Furthermore, oil prices plunged to a four year low this week, causing more turmoil in the markets. West Texas Intermediate’s crude May contract traded at minus $5.78 a barrel. Gold also slid 1.2% to $1,675.68 an ounce.
West Texas oil’s June contract collapsed as much as 42% on Tuesday before stopping around $16. Traders fear that those who take physical delivery of crude in the coming days may not find any outlet or storage for those barrels.
What is the second reason for the stocks’ decline?
Contracts on the three major American gauges lowered significantly due to the critical condition of North Korea’s dictator Kim Jong Un. All industry sectors ended in the red with energy companies leading the decline. The Stoxx Europe 600 Index dropped down for the first time in four days. However, the dollar rose against most major currencies, with the won and ruble falling and the yen edging up.
U.S. and South Korean officials gave differing accounts of Kim Jong Un’s condition. Jeffrey Halley, the market analyst at Oanda Asia Pacific, noted that the uncertainty about who succeeds him in North Korea is the great unknown. The possibility of a worst-case scenario is making markets nervous.
The risk of instability in the region, along with the oil’s collapse and concerns about the pandemic, are more than enough to steer the stocks towards the bear market. However, investors will be looking to corporate earnings for more insight into the impact of coronavirus.
