Stocks across Asia fell after oil prices dropped to their lowest level in almost 20 years on expectations that the coronavirus pandemic would cause a collapse in global demand.

In early trading in the region on Monday, West Texas Intermediate — the US crude benchmark — slid as much as 7.4 per cent to an 18-year low of $19.92 per barrel. Brent — the international marker — dropped up to 7.6 per cent to $23.03 a barrel.

The latest fall in oil prices came after a senior government medical adviser in the US warned on Sunday that up to 200,000 people in the country could die as a result of the Covid-19 outbreak. Donald Trump has extended social distancing guidelines in the US until the end of April, raising new concerns over the pandemic’s economic impact.

Oil prices have plummeted by about two-thirds this year, with a price war between Saudi Arabia and Russia compounding the impact of the coronavirus.

“In a situation where Opec+ are now free of any caps and demand continues to drop as a result of both the virus and the effort to contain the virus . . . the risk is that we continue to see weaker crude prices in the near term,” said Robert Rennie, global head of market strategy at Westpac.

Japan’s benchmark Topix index fell 4.4 per cent on Monday, while South Korea’s Kospi slipped 2.3 per cent. In China the CSI 300 of big Shanghai- and Shenzhen-listed stocks dropped 1.5 per cent, while Hong Kong’s Hang Seng was 2 per cent lower.

Futures tipped Wall Street’s S&P 500 to fall 1.3 per cent when trading begins later in the day. The US stock index last week recorded its strongest three-day rally since the 1930s after Congress passed a $2tn stimulus bill to cushion the economic impact of coronavirus. 

Total cases of the virus worldwide surpassed 700,000 over the weekend as more than 44,000 people were confirmed to have contracted coronavirus on Sunday.

Haven assets gained ground with rising sovereign bond prices pushing down yields. The 10-year US Treasury yield dropped 0.03 per cent to 0.65 per cent. Japan’s yen strengthened 0.4 per cent to ¥107.41 per dollar.

Analysts at Citi on Monday lowered their outlook for global growth by nearly 3 percentage points, forecasting a neconomic contraction of 1.6 per cent in 2020. US gross domestic product is expected to fall by 0.5 per cent this year.

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