The Latest: Price of oil plummets 24% on recession fears
NEW YORK (AP) — The Latest on action in the financial markets (all times local):
Oil prices had another jaw-dropping skid Wednesday, sending the price of U.S. crude oil below $21 a barrel for the first time since 2002.
Benchmark U.S. oil lost $6.58, or 24.4%, to settle at $20.37 a barrel. Brent, the international standard, dropped $2.85, or 13.4%, to close at $24.88.
Investors are betting that demand for oil will be down sharply as factories close and as people have put off vacations and business trips in order to stay home and minimize the risk of spreading the coronavirus.
Those concerns of weaker oil demand have been heightened in recent weeks as economists have issued forecasts predicting that the economic fallout from the viral outbreak will push the U.S. into a recession in the second quarter.
Oil prices have also been hurt by large producers engaging in a price war and refusing to ease back on how many barrels of oil they produce, pushing prices lower.
European markets closed with heavy losses Wednesday on concerns that the coronavirus outbreak will cause even more lockdowns on businesses around the world and put large numbers of people out of work.
France’s CAC 40 dropped 5.9% to 3,754.84, with shares in planemaker Airbus nosediving 22% on concerns that airlines struggling with the near-complete shutdown of air travel will slow down purchases. Britain’s FTSE 100 fell 4.1% to 5,080.58 and Germany’s DAX lost 5.6% to 8,441.71.
The British pound endured steep losses of 4.4% against the dollar to $1.1538, levels not seen since the mid-1980s, on speculation that the country might face a lockdown as severe as those seen in Italy and Spain.
President Trump says no decision has been made on the size of the checks the administration hopes to send Americans, although a figure of $1,000 has been frequently mentioned.
Trump told reporters that “everyone wants to go big” but that the size of the checks was still being worked out with Congress in talks to craft an aid package that could total $1 trillion.
A Treasury Department fact sheet first obtained by the Washington Post says the individual payments could come in two chunks: $250 billion starting April 6 with another $250 billion disbursed starting May 18.
The fact sheet says an additional $300 billion would be appropriated for a small business loan program. It could be used to support businesses, including restaurants and bars, that have suffered from government-ordered efforts to contain the coronavirus.
The stock market extended its losses as Trump and other members of an administration task force spoke about efforts to combat the coronavirus outbreak.
Shares in European plane maker Airbus plunged Wednesday after it suspended operations at all facilities in France and Spain.
Airbus announced the four-day suspension Tuesday because of new virus confinement measures imposed in both countries. It said the suspension would allow time to put new safety and hygiene measures in place.
But the move puts thousands of people temporarily out of work and is a sign of the larger trouble for the aviation industry caused by the virus.
After falling Tuesday, Airbus shares sank another 15% by midday Wednesday, much deeper than the overall decline on France’s CAC-40 exchange.
Airbus is one of Europe’s leading manufacturers and a major employer in France. It said it’s “constantly assessing the situation” and working with airlines and suppliers to minimize the impact of the virus on their operations.