UKX FTSE 100 Index

By Frances Yoon and Caitlin Ostroff 

International stocks fell after U.S. crude-oil futures plunged below zero for the first time in the latest bout of market turbulence sparked by the global coronavirus pandemic.

Futures for the S&P 500 futures pared earlier losses Tuesday to trade 0.2% lower.

The pan-continental Stoxx Europe 600 was down 1% and the U.K.'s FTSE 100 fell 1.2%.

By early afternoon in Hong Kong, the city's Hang Seng Index fell 2%. South Korea's Kospi Composite was down 1%, Australia's ASX 200 stood 2.2% lower and Japan's Nikkei 225 fell 2%.

The moves tracked Monday's losses on Wall Street, where the Dow Jones Industrial Average fell 2.4% and the S&P 500 dropped 1.8%.

Yields on the 10-year Treasury note fell to 0.611% from 0.625% Monday. Bond yields fall as prices rise.

The Australian and New Zealand dollars, two currencies that are sensitive to moves in commodity prices, weakened against the U.S. dollar.

David Chao, global market strategist for Asia Pacific ex Japan at Invesco, said there was a disconnect between commodities such as oil that are sensitive to economic growth, which are pricing in a slower, more tentative recovery, and equity prices, which implied a milder recession.

He said he thought the commodity market view was more realistic.

"We're not going to see a quick snapback recovery, or a V-shaped recovery in the U.S. or even in China, where the lockdowns have been largely removed," he said.

The price of a barrel of West Texas Intermediate crude to be delivered in May rebounded into positive territory, trading at $1.36 a barrel. It ended Monday at negative $37.63, a level that effectively means sellers must pay buyers to take barrels off their hands. Prices for a barrel of WTI crude to be delivered in June rose $0.94 to $21.37 in Tuesday's trading in Asia.

Andrew Harmstone, head of global balanced risk control strategy at Morgan Stanley Investment Management, said a lack of storage space and plunging demand drove the collapse in crude prices.

However, he said investor appetite for risky assets, such as shares, would be driven largely by company earnings and economic data, such as industrial production and retail sales.

"The jury is still out on whether consumption is returning in countries such as China," Mr. Harmstone said. "Consumers still look shocked by the virus, but there are gradually improving signs of the country coming back on line."

Mr. Harmstone said cheaper oil benefited consumer countries such as China, but for regional markets to do well, there needed to be signs the U.S. economy was getting back on track.

After Monday's market moves, Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries are considering cutting their oil output as soon as possible, rather than waiting until next month when the group's recent production agreement with the U.S. and Russia is set to begin, people familiar with the matter said.

Thomas Hayes, chairman and managing member at Great Hill Capital, said the dislocation in oil markets could ease as early as June or July, as U.S. stimulus helped the American economy get back on its feet and boosted demand for oil.

Write to Frances Yoon at frances.yoon@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

April 21, 2020 03:35 ET (07:35 GMT)

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