Asian stock markets and U.S. futures tumbled again Sunday evening following a sharp drop in crude prices, rattling investors who were already grappling with economic disruptions from the coronavirus outbreak.
Dow futures plunged 1,000 points and Standard & Poor's 500 futures dropped 4.2%. Stocks in Asia plummeted, with Japan's Nikkei 225 sliding 3% while Australia's S&P/ASX 200 shed 5%.
Bond yields, meanwhile, slumped to new unprecedented lows. Global markets have endured multiple roller coaster weeks following uncertainty over how much damage the deadly virus will do to the global economy.
Investors were spooked further Sunday after oil prices dropped 20% following Saudi Arabia's decision to cut its export oil prices over the weekend, a move that has sparked concerns over a global oil price war, analysts say.
Saudi Arabia's move came after OPEC failed to strike a deal with its allies on a cut to oil production. An agreement would have contained the plunge in the price of crude caused by the virus outbreak's disruption to world business, analysts say.
Coronavirus fears spooks stocks: Here's how to keep a cool head and protect your 401(k)
Fed rate cut: How the central bank's surprise move affects mortgages, credit cards and home equity lines
Investors monitor oil prices to track supply and demand in energy markets and to gauge the health of the global economy. Lower crude prices tend to benefit the economy because prices at the gas pump typically fall for consumers. The sharp decline in crude, however, has raised worries among investors about the direction of the U.S. economy.
"The drop in oil prices bodes poorly for the stock market because it signals that global demand is falling, which could lead to an economic slowdown," says Adam Sarhan, CEO at 50 Park Investments.
Brent crude futures, the international benchmark, dropped 20% to $36.40 per barrel. U.S. oil prices slumped 20% to $33.22 per barrel.
Stocks have seen sharp swings in recent weeks as investors weigh the global economic fallout from the virus outbreak. A brief stock market rally faded last week after a surprise interest rate cut by the Federal Reserve did little to allay concerns about how much economic growth and corporate profits will be affected.
The S&P 500 index has dropped 12% from its Feb. 19 record, putting the broad index in a correction, or a drop of 10% from a recent high.
On Sunday, the number of fatalities from the virus in the U.S. climbed to 21 with 537 confirmed cases.
Investors have dumped risky assets in a flight to safe havens, driving bond yields to historic lows. The 10-year Treasury yield, which falls when investors are worried about a weaker economy, fell below 1% last week for the first time. On Sunday, the yield on the 10-year Treasury fell below 0.5%.
This article originally appeared on USA TODAY: Dow futures plunge 1,000 points, crude prices tumble on oil price war