Global markets continue slide on COVID-19, oil price war

Global financial markets are witnessing unprecedented turmoil as the world grapples with the dual impact of the COVID-19 pandemic and the oil price war between Russia and Saudi Arabia. Gbite Oduneye, Co-Founder of Eagle Global Markets, recently shared his insights on the unprecedented market conditions in an interview with CNBC Africa. Oduneye highlighted how the rapid spread of the virus has triggered a sharp downturn in global markets, with major indices plummeting by over 30% in just four weeks. The combination of the coronavirus outbreak and the plummeting oil prices has created a perfect storm of uncertainty and fear among investors. Oduneye compared the current market situation to previous crises like the 2008 financial meltdown and the aftermath of the 9/11 attacks, noting that the current crisis is unique due to its biological origins. He pointed out that the fear factor, as indicated by the VIX index, has surged to unprecedented levels, reflecting the extreme uncertainty prevailing in financial markets. Central banks worldwide have responded by rolling out massive stimulus measures, including steep interest rate cuts, in an effort to mitigate the economic fallout from the crisis. The uncertainty surrounding the containment of the virus and the duration of the crisis has further exacerbated market volatility. Oduneye cautioned that unless there is a significant decline in the number of COVID-19 cases in hard-hit countries like Italy, the United States, and Britain, the volatility in global markets may persist in the short term. The widespread economic slowdown resulting from lockdowns and travel restrictions is likely to push the global economy into a recession. Despite the grim outlook, Oduneye expressed optimism that the world will eventually contain the virus, though the timeline remains uncertain. He noted that recent statements from U.S. officials acknowledging the potentially prolonged nature of the crisis have contributed to further market jitters. The prolonged crisis could lead to bankruptcies in the oil industry and impact market dynamics, with countries vying to preserve their market share amid plummeting oil prices. Discussing the implications for oil-producing countries like Nigeria, Oduneye highlighted the significant drop in oil prices and its potential long-term effects on the market dynamics. He warned that prolonged low prices could trigger bankruptcies among oil majors and impact Africa's oil-dependent economies negatively. Moreover, he raised concerns about the possibility of Russia and Saudi Arabia leveraging the crisis to negotiate for the lifting of sanctions imposed on them in recent years. In conclusion, as global markets face unprecedented challenges stemming from the COVID-19 pandemic and the oil price war, investors are bracing for continued volatility and uncertainty. The coming months will be critical in determining the extent of the economic fallout and the ability of countries to navigate through these turbulent times.