0: well the spread of the corona virus has

2: taken its toll on markets around the world.

4: trillions of pounds has been wiped

6: off the value of shares in recent days.

8: oil prices are downed by around a third

12: that's the biggest fall in almost 30 years.

14: well our business presenter Ian

17: King is live from the city. Ian, what

22: is happening on the markets?

26: hello Adam. yes I join you from the trading floor at

28: Peal Hunt City stock brokers where the

30: footsie 100 opened an hour ago. the

31: footsie has fallen very very sharply, by

34: 8 percent at one point. and the footsie, I

37: can tell you, is now officially in bear

38: market territory and hasn't fallen by more

40: than 20 percent since its most recent

42: peak in February. now the real driver for

45: all this Adam is the oil price. that's

47: been behind this latest lurch downwards.

49: on Friday afternoon the Saudi Arabians

52: and their allies in OPEC failed to reach a

55: production cut agreement with Russia.

57: they've been looking for the Russians to

59: trim their output by around half a

60: million barrels a day. the Russians said

63: they weren't going to play ball. the

64: reason for that production cut was that

65: they wanted to bring supplies into

68: balance with demand which has obviously

69: fallen off post the corona virus

71: outbreak. the Russians, as I say, wouldn't

74: play ball so over the weekend the Saudis

76: have effectively declared a trade war on

78: the Russians. they've said that they're

80: going to up production. as a result

81: you've seen this really historic fall in

84: oil prices: crude dropping by 30 percent

86: over the weekend to $11 a barrel or so for

89: Brent crude- I mean that is the biggest

91: one-day fall since the first Gulf War

93: back in 1991. the word crash is often

96: overused but I don't think it's an over

98: exaggeration on this particular occasion

100: to say that the price of oil has

102: absolutely crashed. now that particularly

104: hurts the footsie 100 because it's very

106: heavy in resources stocks. there's the likes of

109: Royal Dutch Shell and BP

110: respectively, the 1st and 5th biggest

112: companies on the footsie 100. well both

115: of those came off by more than 20% at

117: the open they stabilized during the last

119: hour or so but both of those stocks very

122: very important bellwethers held by

124: millions of shareholders around the

126: world, by almost every index track of

128: funds. Well, those have fallen but they're

130: around about 17 to 18 percent lower

133: right

133: now. the other really dramatic news that

135: I have to bring you Adam is what's been

138: going on in the gilt market. now you've

140: obviously seen a big dash towards

142: sovereign debt bonds in recent days and

145: that has depressed the yield to the

147: yield falls when the price rises and you

149: saw on Friday afternoon for example on

152: Wall Street US Treasuries really the

154: yield on those really really dropping

156: overnight you've seen that yield on

158: 30-year US Treasuries the long bond

161: which is a very key financial instrument

163: that's gone below 1% for the first time

165: ever this morning more dramatically that

167: not for the UK UK government bonds gilts

170: you've seen the yield on 2-year gilts go

173: negative for the first time ever in

175: other words borrowers are actually

176: paying the UK government for the right

179: to lend a mother to lend money to it now

181: this is something we've seen in the

183: eurozone over the years for example with

185: German government bonds you've seen

188: those trading on negative yields this

189: has never happened with the UK before

191: say very very dramatic moment all sorts

193: of implications Adam for government

195: borrowing given him that rishis soon at

197: the new chancellor is being urged in

199: some quarters to increase government

201: borrowing turn on the spending taps and

203: the gilt market essentially certainly on

205: the 2-year level is giving him every

207: opportunity to do that but I mean the

209: broad picture Adam is it's absolute

210: carnage you're seeing that as I say big

212: big drops in some of the oil prices the

214: likes of International Airlines Group

216: the owner of British Airways that's been

218: smacked by another 8% today as well so

221: really ugly picture right across the

223: piece and the irony in King is that

225: normally a low oil price and low

227: interest rates would be a stimulus for

229: industry yes that's absolutely right out

233: of normally a higher or price is seen as

236: a tax on growth but in this particular

238: instance you've got a fairly toxic

240: combination because the oil price has

242: got two factors depressing that one is

244: lower demand as a result of coronavirus

247: and the other is higher supply with the

249: Saudis turning on the spending taps this

251: this is going to have all sorts of

253: knock-on effects everywhere Adam you're

254: going to see for example I think some of

256: the big US shale producers they're going

258: to come under pressure a lot of those

260: have issued a lot of debt as in the junk

262: bond market you can see that that coming

265: under pressure so the knock on the

267: we'll be right across all sorts of

268: financial assets classes but to your

270: point is very interesting actually in

272: this regard to look at what happened in

273: Japan overnight now the Nikkei the main

276: Japanese stock index fell by some 5%

278: Japan is a very very big oil consumer a

281: big oil importer other things being

284: equal you would assume that this would

285: do this would be very good for the

287: Japanese economy potentially offer some

289: stimulus what seems to have happened is

291: that there's been a rush into the

293: Japanese yen now the yen is obviously

295: seen as a bit of a safe haven at times

298: like this a higher yen means that it's

300: more expensive for Japanese exporters to

302: export their goods and accordingly

304: that's why you've seen the Nikkei

306: selling off you're seeing all sorts of

307: asset classes coming under some very

309: unusual pricing movements indeed

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