UPDATE 2-US stock futures sink by 5% down limit after crude rout

(Adds oil plunge sparks stock futures decline, comment)
By Herbert Lash
March 8 (Reuters) - U.S. stock futures plunged 5% to hit
their daily down limit and halt trading after the biggest
single-day loss in oil futures in almost 30 years on Sunday
exacerbated fears of a credit crunch across financial markets.
Saudi Arabia's plans to hike crude production and slash its
official selling price came after Russia on Friday balked at
steep production cuts proposed by the Organization of the
Petroleum Exporting Countries to stabilize prices hit by
economic fallout from the coronavirus.
The decline in S&P 500 futures contracts was compounded by
fears the impact from the fast-spreading coronavirus will
intensify, leading to a U.S. recession and sharp tightening in
credit markets.
The depth of the recent sell-off in both equities and
high-yield bonds reflected uncertainty about the virus' impact,
but also indicated confidence that markets would eventually
stabilize and resume their upward trend, said David Joy, chief
market strategist at Ameriprise Financial in Boston.
The plunge in stock futures suggests confidence is being
fractured and the impact of the coronavirus no longer is
manageable, he said.
After-hours trading in the futures contract for the
benchmark S&P 500 stock index EScv1 saw it slip to its 5% down
limit. The decline indicates how much the S&P 500 might fall
when trading begins on Monday.
The collapse in U.S. Treasury yields signals a potentially
more adverse economic impact, Joy said. "In my experience, the
bond market is more prescient than equities."
The implied yield on the futures contract for the 10-year
U.S. Treasury note fell below 0.5% for first time. The benchmark
Treasury hit a historic low of 0.469%, having halved in just
three sessions, as markets reacted to the coronavirus.
The 20% plunge in oil prices, which in normal times would be
positive for global growth, led to panic selling in stock
markets as the risks of loss in oil positions added to already
rising fears of a U.S. recession and a freeze in credit.
John Lekas, chief executive and senior portfolio manager at
Leader Capital in Vancouver, Washington, was blunt in his
assessment.
"We are in an Armageddon situation," Lekas said.
Saudi Arabia said it plans to boost crude output above 10
million barrels per day (bpd) in April after the current deal to
curb production between OPEC and Russia - known as OPEC+ -
expires at the end of March, two people with knowledge of the
matter told Reuters on Sunday. Investors earlier were spooked after Italy, the country
hardest hit by the virus in Europe, essentially locked down much
of its wealthy north, including the financial capital Milan. The
move was aimed at containing an outbreak that saw the number of
deaths leap on Sunday. More than 107,000 people have been infected worldwide and
3,600 have died, according to a Reuters tally.

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Saudi Arabia to hike oil output above 10 mln bpd in April after
OPEC+ deal collapse locks down millions as its coronavirus deaths jump
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