A stock analyst at Tisco Securities said that the Stock Exchange of Thailand (SET) on Monday (March 9) almost called for the “circuit breaker” after the SET Index hit the lowest level at 1,249.31 or 8.4 per cent.

When the market is beset by high fluctuations, the SET will automatically use the “circuit breaker” to allow investors to follow news that affects investment for 30 minutes when the index falls more than 10 per cent and for one hour when the index falls more than 20 per cent.

“The SET has used the circuit breaker three times. The first time was on December 18, 2006, when the Bank of Thailand shocked both the currency and equity markets with its announcement that foreign inflows would be subject to a 30 per cent reserve requirement, resulting in the SET Index on December 19, 2006 hitting the lowest level by 19.5 per cent,” the stock analyst said.

“The second and third times occurred on October 10 and 27, 2008 due to the global economic crisis, also called “Hamburger Crisis”, resulting in the SET Index falling by 10.1 per cent and 10.5 per cent, respectively.”

The analyst said that after the three events, the SET Index took about five to seven months to recover.

“The first time took about five months, while the second and third time took about seven months,” the stock analyst said.

“Irrespective of whether the circuit breaker measure will be used in this period, we believe the bearish SET Index would have a limited downside at 1,220 based on the lowest level of the bear market in the past.”

The analyst suggested that investors gradually buy stocks during fluctuations in the stock markets.

“Large and stocks with good fundamentals that fell sharply have a chance to recover first and have lesser risk than medium and small stocks,” the stock analyst added.

“We recommended buying BTS with base value at Bt15.1 per share, KBANK at Bt154, VGI at Bt10.7, AP at Bt8.6, and KKP at Bt85.”

The virus’s spread – combined with a harrowing decline for oil after top producers initiated a price war – already set off a circuit breaker Monday that halted trading for 15 minutes when the S&P 500 Index plunged more than 7% from the previous day’s close.

If the carnage worsens, the U.S. Securities and Exchange Commission and other financial watchdogs around the globe could conceivably step in and take more extreme measures. These include banning short selling, imposing stricter halts in trading of companies whose shares suffer precipitous falls and, though it would be a radical measure, shutting down stock markets.

Wall Street has a bit of a love-hate relationship with such tactics. Many industry executives consider them an unnecessary intrusion in the markets and question whether they actually work. Some even argue that the moves can exacerbate slumps by making nervous traders more anxious.

But Wall Street embraced regulatory intervention during the 2008 financial crisis. Bank leaders started fretting that their cratering share prices could contribute to runs on their firms, with clients and depositors potentially pulling funds en masse from seemingly teetering institutions. Bank chief executive officers weren’t shy about expressing their concerns to regulators, who ultimately banned bearish bets against almost 1,000 financial stocks. It was a highly questioned and scrutinized decision.

With markets again sliding, here’s an overview of the weapons regulators have in their arsenals to fight back:

– – –

Circuit breakers

Circuit breakers were introduced in the U.S. after the Dow Jones Industrial Average plunged 23% on Black Monday in October 1987. They trigger a timeout from trading after prices tumble by a predetermined amount.

The marketwide circuit breaker for the S&P 500 works like this: If the index falls 7% intraday, trading is paused for 15 minutes. If trading restarts and the index then falls by 13% from the previous day’s close, trading is halted for another 15 minutes. If the decline hits 20%, markets close for the day.

After the 2010 “flash crash,” in which stocks plunged almost 10% in minutes before quickly recovering, trading limits were implemented for individual securities. The current restrictions, known as limit up and limit down, aim to curb stocks from mistakenly trading outside of specified price bands. As a result, stocks can’t be quoted 5% lower or higher than their average reference price in the preceding five minutes for most of the day. If no trades can be executed within that band, then trading is halted for five minutes.

Presumably, regulators could tighten these safeguards to respond to coronavirus.

Proponents of circuit breakers argue that they can slow sell-offs and help restore market confidence. But getting them right isn’t easy. If the pauses are set too wide, they’re rarely triggered. And too narrow of pauses can lead to frequent, unwanted stoppages. The bigger upshot: it’s unclear whether circuit breakers actually remedy panic selling.

– – –

Banning shorts

The SEC’s September 2008 decision to temporarily prohibit short-selling of financial stocks wasn’t made lightly and came amid intense pressure on the agency from the Federal Reserve and Treasury Department.

Wall Street was rampant with speculation that hedge funds were engaging in manipulation by betting against banks and then spreading falsehoods that the firms were close to insolvency. John Mack, Morgan Stanley’s CEO at the time, sent a memo to employees, arguing that the market was “controlled by fear and rumors.”

In a 2013 paper, Harvard University researchers argued that there’s little evidence that the ban lifted stock prices. In drawing that conclusion, they noted that the SEC announced the prohibition on the same day that there was a much more important catalyst for bank stocks – the Fed and Treasury revealed that they were working on a plan to bail out Wall Street.

Companies that were later added to the SEC’s list of shares for which short selling was banned never experienced a price bump as a whole, the Harvard academics wrote. In fact, these companies had negative returns.

– – –

Shuttering markets

Market closures are rare – U.S. trading was shuttered for two days in October 2012 due to Hurricane Sandy and for a week after the Sept. 11, 2001, terrorist attacks. Trading was never suspended during the 2008 financial crisis, a sign of how hesitant regulators and exchanges are to do so.

Based on precedent, coronavirus is more likely to cause a market closure because it’s preventing financial industry employees from getting to work than because it’s spurring a prolonged market slump.

– – –

Uptick rule

For decades, traders were prohibited from short selling U.S. stocks until their prices experienced an uptick. In other words, if every price that a stock traded at was lower than the preceding trade, then a market participant couldn’t ever bet against it.

In 2007, the SEC did away with the uptick rule after determining that it didn’t prevent manipulation but did reduce market liquidity. There were also serious questions raised about whether the regulation still made sense in the era of lightning-fast electronic trading.

When stocks tanked during the financial crisis, many on Wall Street and in Congress partly blamed the removal of the uptick rule. So in 2010, the SEC brought the regulation back in a modified form. In the new version, short selling is restricted if a stock falls 10% from the previous day’s close. When the 10% threshold is triggered, traders can only execute short sales at a price above the market’s best bid, and the curb is in place through the following trading day.

Some traders, including legendary money manager Leon Cooperman, are known to argue during market downturns that the SEC should re-institute the original uptick rule because doing so would reduce volatility.

That seems unlikely to happen. Brett Redfearn, the official who runs the SEC division that oversees stock trading, told CNBC in a December 2018 interview that the uptick rule didn’t work.

Panic selling, margin calls, vanishing liquidity and coronavirus work-from-home arrangements were just some of the challenges traders faced as risk assets plunged, currency volatility soared and money flooded into government bonds. They also had to figure out how an oil-price war and rapidly spreading outbreak will affect the global economy, companies and geopolitics.

“The day has been absolutely chaotic,” said Eugene Kang, whose team trades assets including Russian government bonds at NH Investment & Securities Co. in Seoul. “Financial markets have been caught off guard.”

Here’s how the turmoil is playing out on trading desks around the world.

– Blowout in Oil

Zhang Chenfeng, an oil-trading analyst at Chinese hedge fund Shanghai Youlin Investment Management Co., hardly slept last night. He knew Saudi Arabia’s decision to launch an all-out price war with Russia would pummel the market, but the 30%-plus decline on Monday still came as a punch to the gut. “It was shocking,” Zhang said. “It was historical.”

It also quickly spread to other markets. The 10-year Treasury yield fell below 0.5% for the first time. Oil-sensitive currencies plunged, with the Mexican peso weakening 6%. Futures on the S&P 500 Index sank about 5% — triggering trading curbs — and European stocks looked set to follow Japan into a bear market.

– Hypnotized by Selling

Some trading floors were eerily quiet. “It’s almost like everyone is hypnotized together and levels are just going south with nobody able to halt the slide,” said Tsutomu Soma, a bond trader at Monex Inc. in Tokyo, who has been in the market long enough to experience the Black Monday crash in 1987. “It’s been a while since I saw this kind of sell-off,” he said. “But I’m not seeing the kind of yelling across the trading floor or people throwing in their towels like back in the old days. Perhaps it’s a difference in the generations I’m surrounded by now.”

For one of those millenials, 29-year-old Futures First research analyst Rishi Mishra, market madness has given way to hysteria. “To me, personally, it’s just funny now! The kind of prices that traded today, no one could make any sense out of them.”

“These moves are pretty amazing,” said Takeo Kamai, head of execution services at CLSA Securities Japan. “We are witnessing once-in-a-career type moves and I think many professionals are left in awe. Only a handful could have fathomed this type of scenario for global markets in 2020.”

– Currencies Gone Wild

As the turbulence spread to currencies, some traders struggled to keep up with rapid swings in markets that had only just recently seen volatility plunge to record lows. Both the Australian and New Zealand dollars had quick legs down before recovering some of the losses. The yen surged as much as 3.6% and Norway’s krone slid 4.7%.

“When you see a 4% move in just a couple of minutes, it tends to be pretty safe to take the other side of the short — but this time it was just too short a window,” said Stuart Simmons, a senior portfolio manager in Brisbane, Australia, at QIC Ltd., which oversees $54 billion (A$83 billion) in assets. “When they start triggering stop losses, the currencies end up cascading on themselves. Price action turns dysfunctional.”

Margin calls may have added to the volatility, said Margaret Yang, a strategist at CMC Markets Singapore Pte. “We have seen more margin calls and fundings this morning,” she said. But some clients were also topping up to take larger positions, Yang added, a sign that at least some viewed Monday’s turbulence as an opportunity.

– Coping With Panic

With fear in the air, the only topic of discussion at GAM Investment Management is how much worse this can get, said Paul McNamara, who oversees more than $7 billion of developing-market fixed-income assets.

In Taipei, where the normally subdued Taiex index plunged more than 3% and closed at its low for the day, two fund managers took starkly different approaches to the rout. Shin Kong Investment Trust’s Sean Lee sped up adjustments to his holdings, saying he needed to act fast because “it’s hard to say what will happen next.”

By contrast, SinoPac Securities Investment Trust’s Hiroki Lu is planning to wait before making big moves.

“I just checked market performance when it opened and moved on to do other things. There is no point of monitoring markets in a situation like this — it’s too volatile and investors are too panicky,” Lu said. “It’s not the first time that the market has been so panicked, so I am cool about it. My clients didn’t ask about it, either.”

– Working From Home

Mandatory work-from-home arrangements imposed by financial firms to contain risks from the coronavirus outbreak added another layer of uncertainty.

“When you’re working at home without colleagues, you feel more nervous about things because you’re on your own,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors.

Kirby Wang, managing director at Beijing Haihuiyuan Investment Co., has been working from his home office for more than four weeks. He has to balance his time spent on investing with teaching his young children Chinese poetry, after their school moved all classes online. The market is bringing back uncomfortable memories of 2008, when he worked at Lazard Asset Management in New York. “I certainly hope this won’t be as bad as 2008, but it’s not out of the question,” he said.

Luke Hickmore, a money manager at Aberdeen Standard Investments, is finding having a dog is helping him deal with the plunge in Treasury yields.

“It’s a lot calmer with a labrador,” he said. “I did try to explain it to her — she licked my cheek, fair reaction.”

– Welcoming Volatility

For some investors, the return of market volatility couldn’t have come sooner. Chris McGuire, whose Phalanx Japan AustralAsiaMulti-strategy Fund is geared to profit from widening price swings, has gained nearly 10% this year through March 6, after a rough past three years that saw his firm’s assets under management drop to $22 million from about $160 million.

Chicago-based McGuire, whose fund is still up about 13-fold since April 2005, said his bets on Japanese convertible bonds have “finally” started to pay off again. “Covid-19, at least for now, is providing the black swan event that the markets never realized could happen,” he said.

Ali El Adou, head of asset management at Daman Investments in Dubai, said he rushed to the office much earlier than usual on Monday so he could invest quickly if needed: “Although markets are crashing and volatility is spiking, we are closely monitoring prospective investment opportunities.”

Traders are pricing in about 80 basis points of cuts in March, and 100 basis points by July, which would drag borrowing costs down to zero. Those bets fueled a rally in U.S. Treasuries, with the rate on 30-year bonds diving as much as 59 basis points and pushing the entire yield curve below 1% for the first time ever. Benchmark U.K. bond yields tumbled below zero for the first time, Germany’s two-year bonds and rates in Australia and New Zealand fell to new lows.

The latest frenzy in markets, spurred by concerns over an oil price war between Russia and Saudi Arabia, prompted the New York Fed to say it will boost the size of this week’s overnight and term repo operations to ensure reserves are ample and reduce the risk of pressures in money markets.

“The more I think about it, the more it makes sense to me that the U.S. cash rate will fall below zero some time very, very soon,” said Chris Rands, portfolio manager at Nikko Asset Management Ltd. in Sydney. “I wouldn’t be surprised if the U.S. tries negative rates, especially with the tailspin in oil now adding to the virus fears.”

Goldman Sachs Group Inc. economists said Monday that they now expect the Fed to slash interest rates back to the record low of 2015 as the U.S. economy stagnates because of the coronavirus. The Fed will cut its benchmark rate by 50 basis points when policy makers gather on March 17-18 and again at their April 28-29 meeting, Jan Hatzius, Goldman Sachs’s chief economist, said in a report to clients on Monday.

The spread of the deadly outbreak and its fallout on supply chains and consumer spending have seen a dramatic repricing of global interest-rate expectations in the past month. The jolt lower in oil from the price war will sap inflation.

The stampede for Treasuries comes after a weekend dominated by crisis headlines including the oil price-war, plunging Chinese exports and Italy’s virus-induced lockdown. Adding to the sense of malaise, Japan posted its biggest economic contraction in more than five years, while France said its economy may barely expand.

Risk assets plunged with the S&P 500 dropping almost 5%, whipsawing back from losses that topped 7% and triggered a trading halt. European stocks plunged by the most since 2016, putting the STOXX Europe 600 Index on course for a bear market. Commodity-linked currencies weakened, including the Norway’s krone and Canada’s dollar falling against the U.S. dollar. Five-year German government debt yields slid, hovering at about minus 1%.

Gains in the yen and euro weighed on the dollar, sending the Bloomberg dollar spot index to a two-month low amid concerns that more Fed cuts would hurt the greenback’s appeal.

Treasuries, the world’s deepest pool of haven assets, have been rallying in the past few weeks as the virus wreaked havoc across the globe. Fed Chairman Jerome Powell surprised markets last week with an emergency rate cut of 50 basis points, raising the specter that the virus fallout will be longer and worse than anticipated.

The yield on 10-year bonds dropped as much as 45 basis points to 0.31%, before rebounding to about 0.59% as of 11:59 a.m. in New York. Most of the German curve is now trading under negative 0.55%, which, together with the euro’s advance, may give the European Central Bank food for thought when it decides on interest rates this week.

“We know what the financial crisis looked like, the tech wreck, but this bond rally we’re seeing is just unchartered waters,” said Stephen Miller, adviser at GSFM, a unit of Canada’s CI Financial Group. “A global recession is now a probability, not a possibility.”

On Monday, the Fed lifted the amount of temporary cash it’s willing to provide markets as pressure intensifies for the U.S. central bank to tackle the risk of a worldwide credit crunch.

The movements in fed funds futures shows the market is pricing in the chance the Fed slashes rates to zero — from a range of 1% to 1.25% currently — by the end of the first-half of the year. The implied rate on the July contract, at about 14 basis points, aligns with the base of the Fed’s target rate range being at zero in June.

Fed Boston President Eric Rosengren said Friday that policy makers should be allowed to buy a broader range of assets if they lack sufficient ammunition to fight off a recession with interest-rate cuts and bond purchases.

And money managers are expecting the Reserve Bank of Australia to turn to quantitative easing as soon as the middle of the year, while bets are increasing for the Bank of Japan to ease this month.

“The market is panicking,” said Shinji Hiramatsu, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co. in Tokyo. “Position adjustment, loss-cut buying and all sorts of buying are emerging. Everybody’s buying Treasuries.”

“The economy appears is hitting a dead-spot in March as the coronavirus spreads and as social distancing and self-quarantine measures take hold,” Neil Dutta, head of U.S. economics at Renaissance Macro Research, said in a note. “We expect the Fed to cut to zero in the March meeting. This is already priced in the market. ”

The super-wealthy can deploy sophisticated strategies to pass on billions of dollars to their descendants tax-free. Plunging interest rates, combined with lower stock prices, make it even easier to protect those fortunes from the Internal Revenue Service.

The ultra-rich and their advisers can also take a longer-term view of market volatility because their beneficiaries are future generations — some who haven’t even been born yet.

“They have more money than they could ever spend,” Ali Hutchinson, a senior wealth planner at Brown Brothers Harriman, said of her clients. “Even though this volatility could go on for months, they’re not thinking about it in that short-term way. The smart ones are using it as an opportunity.”

The richer you are, the more options you have to insulate yourself from the virus and its effects. Operators of private jets are seeing more demand from wealthy travelers reluctant to fly commercial. Members of the top 0.1% say they’re in close touch with world-class doctors and are considering fleeing to remote vacation homes in the event of a serious outbreak.

The virus can also be a chance for the wealthy to make money. The most intuitive way is to buy beaten-down stocks in industries like airlines and hotels that are being damaged by the virus but will ultimately survive even a devastating pandemic.

“Are people going to travel in 10 years?” Hutchinson asks rhetorically.

Using the financial turmoil to avoid taxes requires more complex planning. But lower rates and market valuations make this an ideal time to try, advisers to the wealthy say.

“You could almost say it’s a perfect storm for wealth-transfer planning,” said David Stein, a partner on the private client and tax team at Withersworldwide.

The IRS levies a 40% estate and gift tax on the biggest fortunes, exempting transfers of $11.6 million in 2020 for individuals and more than $23 million for married couples. For Americans richer than that, a popular tool to pass money to children and grandchildren tax-free is the grantor retained annuity trust, or GRAT.

Here’s how it works: A rich family will put a stock or other asset in a GRAT, a transaction that is technically a loan. If the stock rises in value, those proceeds go to beneficiaries tax-free. If the stock drops, there’s no harm done — shares just go back to the donor.

“It’s not ‘heads I win, tails I lose,’ it’s ‘heads I win, tails I break even,'” Stein said. Clients often set up multiple GRATs holding different investments, creating new ones whenever old trusts expire.

While they’re already widely used, “it’s a time when a lot of folks are looking at doing GRATs,” said Bryan Kirk, director of financial and estate planning at Fiduciary Trust Co. International.

One reason is market declines, which give assets in GRATs more upside potential. BBH’s Hutchinson also is advising clients to give up on old GRATs that have losses. She cites research by her firm showing that GRATs with even small initial losses are unlikely to succeed over their life. It’s better to start over with new GRATs, seeded with stocks now trading at lower valuations.

Plunging interest rates are another reason for new attention on GRATs. When taxpayers loan money to set up GRATs or other trusts, the IRS requires that trusts pay interest back to the lender. The rates, which are set by a formula and published each month, are a hurdle that GRAT investments must clear in order for returns to flow to beneficiaries.

The hurdle rate for a typical GRAT has fallen by half since the end of 2018, to 1.8% this month. That doesn’t reflect the impact of the Federal Reserve’s surprise rate cut on Tuesday. With Treasury yields hitting record lows, Stein expects the IRS’s April rate could drop to about 1.2% or even lower.

That means the wealthy may be tempted to wait until next month to start GRATs, though advisers say timing the market well is ultimately more advantageous than grabbing a slightly lower interest rate. “The thing that really makes a difference is what happens to asset values,” Fiduciary Trust’s Kirk said.

Similar IRS rules apply to loans within families, another popular strategy to pass on wealth while avoiding the estate tax. As the IRS-required rates drop, advisers say they’re helping rich families refinance those loans, so heirs and their trusts are paying less back to benefactors. Kirk also expects his clients to make more new loans to children and grandchildren, giving next generations the cash to ride out volatility.

“A lot of people don’t want to sell when the market is down,” Kirk said. “If they need liquidity, borrowing from an older generation that has cash available is an option.”

Moscow’s refusal to cut its oil output by half a million barrels a day shattered the unusual three-year marriage of OPEC, led by the Saudis, and major non-OPEC producers, led by Russia, as oil producers scrambled to find a way to respond to weakening global demand resulting from the deepening crisis over the coronavirus.

Saudi Arabia, angered by Moscow’s position, said Sunday that it would open its spigots and drive down prices, making this oil price cycle the only one in nearly a century to combine weak demand with a global price war.

Global markets opened down sharply Monday, with the leading benchmark varieties of crude tumbling more than 20 percent after other big falls in recent weeks. The drop was the steepest since prices plunged 35 percent Jan. 17, 1991, the day the U.S.-led coalition launched Operation Desert Storm to force Iraq to withdraw from Kuwait.

The plunge in prices, however, will also benefit consumers who should see markedly lower prices at the pump. For them, the price war will act like a tax cut, putting more money in the pockets of motorists.

“I consider this as a $1 trillion stimulus to the world economy with a $30 oil price decline,” Scott Sheffield, chief executive of Irving, Texas-based Pioneer Natural Resources, one of the biggest independent oil companies, said in an email.

Is the oil world big enough for two swing producers?

President Donald Trump weighed in on Twitter about the plunge in oil prices, noting that lower prices were “Good for the consumer, gasoline prices coming down!” The president also tweeted that “Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop!”

Sheffield said Pioneer is secure, but other companies plying the vast shale in places such as North Dakota, Oklahoma and Texas will face difficulties.

“We are preparing for two years of low prices and will make the necessary adjustments to maintain our great balance sheet,” he said. But, he added, “there will be many bankruptcies in our industries and tens of thousands of layoffs over the next 12 months.”

Investors pummeled a broad range of stocks Monday. By midmorning, shares of Pioneer, Continental Resources and oil service giant Schlumberger were all down 35 percent. Shares of the major international oil companies were down 7 to 17 percent.

Oil demand will decline for the first time since 2009, the International Energy Agency said Monday, revising its earlier forecasts. The IEA said that global demand will shrink by 2.5 million barrels a day in the first quarter of the year.

“This is the first time since 1930 and ’31 that a massive negative demand shock has coincided with a supply shock,” Robert McNally, president and founder of the Rapidan Energy Group, said in an email. “It’s sort of like a black swan to simultaneous hurricane event.”

McNally, who served on President George W. Bush’s national economic and security councils, said that in late 1930, giant fields in Texas started up “right into the teeth of the Depression, sending oil prices down to pennies on the barrel. This ultimately forced Texas to send troops into the oil fields, and that was the beginning of decades of strict oil quotas.”

The weak conditions for oil led some investment houses to reassess the ratings of OPEC countries, especially those with large populations such as Nigeria. Fitch Ratings said that many of those countries were “still struggling to adjust” to the fall in oil prices in 2014. It said that for those countries to balance their budgets, which rely heavily on oil revenue, they would need “break-even oil prices well above current market rates.”

But most of the places that will be hurt worst by the crash in prices will be the U.S. shale fields, where costs are substantially higher than the giant reservoirs of Saudi Arabia or Russia. Thanks to technological advances and untapped shale layers, U.S. oil and natural gas output has soared, insulating the U.S. economy somewhat and easing price pressures worldwide. Texas now produces more crude oil than Iraq, and production has also increased in states such as North Dakota and Oklahoma.

But the higher costs and the short lives of shale wells – usually 18 to 24 months – make the U.S. fields more sensitive to lower prices. Sheffield said he expects U.S. shale production to start declining in the third quarter of this year and to fall more than 1 million barrels a day in 2021. And the number of wells operating onshore in the United States is already down 25 percent from a year ago, according to the authoritative Baker Hughes rig count.

“No question U.S. shale producers will experience collateral damage in this price war between Russia and Saudi Arabia,” McNally said. “They were already under enormous pressure, and supply growth was set to taper off sharply by the end of the year. So they had pneumonia and just got hit with the coronavirus.”

– – –

This isn’t the first time Saudi Arabia has sought to punish other oil exporting countries for expecting the kingdom to act as the sole swing producer, cutting its own output while other exporters benefit. In the 1980s, Saudi Arabia drove down prices to less than $10 a barrel.

“From time to time a price bust serves to instill discipline and remind producers of the importance of collective supply management,” McNally said. “Since the early 1980s episode, when Saudi Arabia’s production fell to 2 million barrels a day, the kingdom is unwilling to be the sole swing producer, especially when huge cuts are needed.” Saudi production capacity is about 12 million barrels a day.

Saudi Arabia kept production relatively high during 2014 to 2016, when prices fell to $26 a barrel. “Apparently, Moscow needs a reminder,” McNally said.

Oil-exporting countries had agreed to production cuts of 2.1 million barrels a day that were due to expire at the end of March. At an OPEC meeting last week, those cuts were extended through the end of the year. But OPEC also proposed an additional 1.5 million barrels a day of cuts, with non-OPEC countries providing half a million barrels a day of output cuts. Russia declined.

“The new price war is between Saudi and Russia. It is NOT about shale,” said Pavel Molchanov, senior energy analyst at the investment firm Raymond James. “They pretended to be allies for three years, and now the pretense is over.”

Molchanov said that the spat between the two giants was “partly economic” but also political, with differences over Iran and Syria, both foes of the Saudi regime but both on good terms with Moscow.

Nonetheless, Russia, which has been working to expand its influence in the entire region, had taken part in an earlier production cut in cooperation with the cartel, one that began in January and is due to expire at the end of March. Last fall, Russian President Vladimir Putin made a much-publicized visit to Riyadh as the two countries were trying to improve ties beyond the energy sphere.

“To the extent that there is silver lining, it is this: Saudi cannot keep this going for long,” Molchanov said. He said that the kingdom needs $80 a barrel oil to balance its fiscal needs, and while Saudi Arabia has large reserves, current price levels are “not even in the ballpark of what would sustain its economy.”

Moreover, Saudi Aramco, the national oil company, is now a public company. Low prices over a prolonged period will hurt private investors.

With Italy attempting a sweeping lock-down across its richest areas and infections nearly doubling in Spain, economists at Morgan Stanley and Berenberg expect euro-zone gross domestic product to shrink in the first half of the year. In France, the central bank now sees output barely growing in the first quarter.

French Finance Minister Bruno Le Maire highlighted his concern, saying Europe needs a “call to arms” to defend the already-weakened economy. The outbreak has disrupted companies’ supply chains, forced airlines to cut capacity and prompted shoppers in some countries to stockpile essential food items. The Spanish city of Vitoria ordered a shutdown of all schools for 15 days.

The downbeat assessments come amid a meltdown in financial markets not seen since the height of the global financial crisis in 2008. It marks a grim start to the week for European Central Bank policy makers, who meet in Frankfurt and may be forced to lower interest rates and step up bond purchases. The U.S. Federal Reserve has already acted, with an unexpected easing last week.

“I want a strong, massive, coordinated response,” Le Maire said on France Inter Radio as the central bank slashed the outlook for the country’s economic expansion this quarter to 0.1% from 0.3%.

“We should work on a stimulus plan with fiscal and budgetary measures, and tax cuts, so that when the epidemic crisis is over we can relaunch the economic machine,” he said.

The virus is another blow to the euro area’s second-largest economy, after disruption from strikes caused output to shrink at the end of 2019.

“This slowdown is potentially severe but temporary,” Bank of France Governor Francois Villeroy de Galhau said in a rare statement accompanying the report.

Germany, Europe’s largest economy, said it will invest an additional 12.4 billion euros ($14.1 billion) between 2021 and 2024 and introduce changes that will make it easier for companies heavily affected by the virus like Deutsche Lufthansa AG to apply for aid to offset wages when they are forced to temporarily halt work.

One major problem with the current crisis is the potential for a shutdown of consumer demand if people stay home. Household spending gave a lift to many economies in 2019 during the savage manufacturing recession, so the loss of that support is a huge blow.

Morgan Stanley on Monday cut its 2020 growth prediction for the euro area to just 0.4% from 0.9%. Nomura downgraded its full-year view to 0.4% as well.

At Berenberg, economists are also predicting a euro-zone recession, with huge slumps of at least 0.4% this quarter and next. The economy won’t even eke out growth over the full year, it said.

Its latest predictions include a 1.2% slump in Italy this year, while Germany, Europe’s largest economy, will contract by 0.4%.

Investors who three weeks ago were doubling down on the rally’s longevity are being forced to unwind bets with a fury that is rarely ever seen. Engulfed in the quickest correction ever, American stocks are in serious danger of suffering the fastest bear-market plunge from an all-time high, unless the pace of selling slows.

If the rally that began 11 years ago Monday finally ends, a signature theme of its last chapter will be that hysteria broke out smack at the market’s top and came with no prologue. Even the Crash of 1987, when the Dow Jones Industrial Average fell 22.6% in one day, occurred months after the peak was reached.

“We’ve gone from a state of euphoria to a state of pessimism,” said Kevin Caron, portfolio manager for Washington Crossing. “That requires a fast adjustment.”

S&P 500 futures suffered one of their biggest spasms yet on Sunday night, extending a slide that left the March contract within 4% of completing the 20% tumble that traditionally denotes a bear market. In fact, it could be closer than that. The overnight sell-off triggered exchange circuit breakers that limit losses in futures to 5%. An exchange-traded fund tracking the S&P 500 that isn’t subject to those curbs was changing hands 18.3% below its Feb. 20 high as of 8:16 a.m. in New York.

Should a 20% decline to 2,708.92 on the S&P 500 be completed before April 1, it would mark the fastest slump into a bear market from a record high. During the 1929 Great Depression, it took 42 days to kill the bull.

The violence of the repricing can be seen in a set of charts that show investors scrambling to adjust to the coronavirus’s impact. It’s also, perhaps, a consideration for anyone using stock reactions as a litmus on the outbreak’s toll. While the prospect of a pandemic is terrifying, part of the market’s pain reflects its own excesses being unwound.

From computer-driven funds to stock pickers, money managers have been slamming the sell button. According to a survey by the National Association of Active Investment Managers, equity exposure at funds just had its biggest decline since 2014.

Commodity trading advisers, or trend followers known as CTAs, were likely “at the core” of the equity selling in late February, according to JPMorgan Chase & Co.’s strategists including Nikolaos Panigirtzoglou. Based on their estimates, the group went from a fairly long position in mid-February to fairly short at end of the month.

It created a “negative flow impulse,” Panigirtzoglou wrote in a Feb. 28 note to clients. “Momentum traders were caught up with very long U.S. equity futures positions into the correction and were forced to unwind these positions abruptly, propagating their own negative momentum.”

In an update Friday, Panigirtzoglou estimated that equity selling from CTAs in the final week of February approached $400 billion. Should the S&P 500 fall another 4%, that would trigger $120 billion of additional selling, he said.

At Deutsche Bank AG, strategists including Binky Chadha aggregated fund positioning and found their overall exposure has gone from “extremely overweight” to “very underweight.” Measured against the past 10 years, the positioning indicator stood at the 5th percentile as of March 5, down from the 95th percentile a few weeks ago.

Equity bears, who have had a hard time staying in business during the 11-year equity rally, are getting a moment of vindication. A Goldman Sachs Group Inc. basket of the most-shorted stocks tumbled 14% in the final week of February, handing those betting against them the best gain since 2012. It fell another 5.6% last week.

As market losses snowballed, short sellers kept boosting bets. The SPDR S&P 500 ETF Trust, ticker SPY, saw the amount of shorted shares rise to 7% of its total outstanding, according to IHS Markit data. At the start of the year, it was about 1%, the lowest since 2018.

In the derivatives market, panic has replaced euphoria. The 5-day moving average of the equity put-to-call ratio, which rises as bearish bets increases, jumped to almost 0.8, hitting the highest level since last August. A month ago, the ratio sat at a nine-year low of less than 0.5.

“The million dollar question is whether the stock-market drop in the last two weeks starts to spread the malaise from Wall Street to Main Street,” Chris Rupkey, chief financial economist for MUFG Union Bank. “Stocks may be out in front of the economy with these double-digit recession magnitude losses. But the game is over if companies start to lay off workers because then a recession would mean the bull market in stocks is really over for the next few years.”

The former allies pledged swift retribution for the collapse of the OPEC+ alliance meeting last week. The Gulf kingdom has slashed its official crude prices and is threatening record output. Russia’s largest producer, meanwhile, said it will ramp up production next month. Oil futures fell more 30% in New York and London on Monday, the biggest drop since the Gulf War in 1991, before pulling back to around a 20% decline.

The freefall ricocheted across financial markets. U.S. stocks plunged almost 6% with the S&P 500 index down 18% from its Feb. 19 all-time high. All of the annual growth the International Energy Agency had anticipated last month — just over 800,000 barrels a day — has been wiped out and demand is now expected to contract by 90,000 barrels a day.

“The situation we are witnessing today seems to have no equal in oil market history,” said IEA Executive Director Fatih Birol. “A combination of a massive supply overhang and a significant demand shock at the same time.”

The cataclysmic price collapse will resonate through the energy industry, from giants like Exxon Mobil Corp. to smaller shale drillers in West Texas. It will hit the budgets of oil-dependent nations from Iraq to Nigeria and could also reshape global politics, eroding the influence of countries like Saudi Arabia. The fight against climate change may suffer a setback as fossil fuels become more competitive against renewable energy.

“Markets are bracing for oil prices in the 20s,” said Ellen Wald, president of Transversal Consulting and a nonresident fellow at the Atlantic Council’s Global Energy Center. “I don’t think production can win this war. There’s not enough demand for it. That’s the difference between 2014 and today.”

Brent for May settlement tumbled as much as $14.25 a barrel to $31.02 on the London-based ICE Futures Europe Exchange. West Texas Intermediate crude for April slumped as much as 34% to $27.34 a barrel on the New York Mercantile Exchange, before paring losses to 19%.

“It’s just a nightmare,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.

Hammered by withering demand due to the coronavirus, the oil market is sinking deeper into chaos on the prospect of a supply free-for-all. Saudi Arabia slashed its official prices by the most in at least 20 years over the weekend and signaled an unambiguous declaration of intent to flood the market with crude.

The state-owned Saudi producer has privately told some market participants it plans to raise output well above 10 million barrels a day next month and could even reach a record 12 million a day, according to people familiar with the conversations, who asked not to be named to protect commercial relations.

Russia’s state oil company Rosneft PJSC is planning to lift oil production as soon as the current OPEC+ deal ends, according to a person close to the company. That suggests the company could start ramping up output on April 1 and add 300,000 barrels a day within weeks of that date.

Oil prices have suffered massive drops each time Saudi Arabia has launched a price war to drive competitors out of the market. WTI fell 66% from late 1985 to March 1986 when the country pumped at will amid a resurgence of U.S. oil output. Brent crude briefly dipped below $10 a barrel when the kingdom had a showdown with Venezuela in the late 1990s.

With oil demand already plummeting due to the economic impact of the coronavirus, traders forecast that prices will go even lower. The oil market is now faced with two highly uncertain bearish shocks with the clear outcome of a sharp price sell-off,” said Jeffrey Currie, head of commodities research at Goldman Sachs Group Inc. in New York.

While the price crash has been dramatic, for oil specialists the movements in time-spreads, options and volatility are just as remarkable. Brent’s three-month price structure widened sharply as oil for prompt delivery collapsed against later shipments.

It moved deeper into contango, a sign of bearishness and oversupply, making it profitable for physical traders to buy crude and put it into storage, either in onshore tank farms or at sea on tankers.

The S&P 500 plunged 7% four minutes into the session, tripping a NYSE circuit breaker aimed at preventing a broader panic. After trading resumed, the index dipped just a bit more, then quickly pared losses to trade about 5.5% lower as of mid-morning in New York.

“There’s a reason why they have those circuit breakers — it’s to give people time to come back from panicked feelings,” said Chris Zaccarelli, the chief investment officer at Independent Advisor Alliance. “It’s always a good idea to give people time to digest the move and apply some logic.”

The stock rout, spurred by tumbling oil prices and growing fear of the economic impact of the coronavirus, put the vitality of the longest-ever bull market in jeopardy. The index is now down about 17% from a record reached in mid-February.

“Certainly that 15-minute pause seemed to create a little bit of stability,” said Rob Romano, head of Americas portfolio advice at UBS Global Wealth Management. “That’s exactly why we have it in place, to ensure that moves are orderly.”

Volatility has reigned in markets around the world amid an outbreak that has infected more than 108,000 people. At least 10 billion shares have traded on U.S. exchanges each day for two weeks, and the VIX — dubbed Wall Street’s “fear gauge” — has closed above 30 for seven days straight.

Futures had plunged 4.89% overnight Sunday, triggering exchange rules that limit losses on those contracts and distorting price discovery for the cash market before the opening. Crude oil fell as much as 34% to $27.34 a barrel, the worst day since the Gulf War in 1991, after Saudi Arabia initiated an all-out price war.

Another 15-minute pause would happen if stocks reverse course and losses reach 13%, a drop that would put the S&P 500 at 2,585.96. If the decline hits 20%, or 2,377.9, markets will close for the day. Only the 20% rule applies in the final 35 minutes of cash trading. Traders have never seen a 13% or 20% breaker trip.

Today’s stoppage likely interrupted computer-driven trades based on algorithms, potentially preventing much bigger losses, according to Matt Maley, an equity strategist at Miller Tabak & Co.

“That doesn’t mean the market cannot go back down and make a lower-low at some point, but the circuit breaker worked as it was intended to this morning,” he said.