NEW YORK (Reuters) – Plunging U.S. crude oil prices pulled global equity markets lower Monday, kicking off a busy week of data and earnings that will further reveal the economic damage of the coronavirus pandemic.

FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 13, 2020. REUTERS/Andrew Kelly

Assets like the dollar and government debt rose as investors edged into safe havens.

With some global storage facilities nearly at capacity, the ‘front-month’ May benchmark U.S. crude contract CLc1 fell 40.56% to $10.86 per barrel – the lowest since 1998. Brent LCOc1 was at $26.05, down 7.23% on the day.

“For oil there is a bit of a technical story (with storage), but still, if energy consumption is down 30% and OPEC reduces supply by 10%, there is still a large gap,” said Rabobank’s head of macro strategy, Elwin de Groot.

MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 1.18%., following broad declines in Europe and Asia.

In early trading on Wall Street, the Dow Jones Industrial Average .DJI fell 458.91 points, or 1.89%, to 23,783.58, the S&P 500 .SPX lost 40.56 points, or 1.41%, to 2,834 and the Nasdaq Composite .IXIC dropped 65.40 points, or 0.76%, to 8,584.74

The S&P 500 .SPX has rallied 30% from its March low, thanks in part to the extreme easing steps taken by the Federal Reserve and a $2.3 trillion stimulus package passed by Congress.

Yet analysts are likely underestimating the impact of the global economic lockdown on earnings results, noted Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities.

The United States has by far the world’s largest number of confirmed coronavirus cases, with more than 750,000 infections and over 40,500 deaths, according to a Reuters tally.

Against a basket of its rivals =USD, the U.S. currency rose 0.2% to 99.98 and edged closer towards a three-year high of near 103 hit last month.

Bond markets also suggested investors expected tough economic times ahead. Benchmark 10-year notes US10YT=RR last rose 12/32 in price to yield 0.6179%, from 0.656% late on Friday, compared with 1.91% at the start of the year.

“We are dealing with scales of declining economic activity that nobody has seen before. The potential hit to GDP in the second quarter this year will probably far exceed what we saw at the worst point of the financial crisis,” Capital Group economist Robert Lind said in a note.

Selling pressure on Italian government bonds has returned in the past week, undoing some of the benefits of the European Central Bank’s massive bond-buying scheme, after euro zone politicians failed to agree to common debt issuance as a means of addressing the crisis.

Italian Prime Minister Guiseppe Conte used an interview with Germany’s Sueddeutsche Zeitung on Monday to repeat calls for the EU to issue common euro zone bonds to demonstrate the bloc’s solidarity.

Reporting by David Randall, Editing by Nick Zieminski

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