Dow futures fall maximum amount allowed, poised to plunge 1,300 points at the open as oil prices deliver a punishing blow to Wall Street

U.S. stock-index futures were down sharply Monday, falling to their daily limit, as fears of an oil price war between OPEC and Russia sent crude futures plunging, sending shock waves through global financial markets already shaken by the spread of COVID-19.

Analysts seeking safety fled into government bonds, sending the yield on the benchmark 10-year U.S. Treasury plummeting 25.1 basis points to 0.462% — another all-time low. Yields and debt prices move in opposite directions.

What are major indexes doing?

Dow Jones Industrial Average futures US:YM00 were down 1,255 points, or 4.9%, at 24,534, while S&P 500 futures US:ES00 were off 145.10 points, or 4.9%, at 2,819. Nasdaq Composite futures US:NQ00 were off 410 points, or 4.8%, at 8,093.25. Futures fell their 5% limit in early Asian trade and have traded near there for most of the session.

Stocks could see steeper losses when cash trading opens Monday. Initial circuit breakers kick in to temporarily halt trading with a fall of 7%.

Read:Here’s when S&P 500 circuit breakers kick in on Monday
On Friday, the Dow Jones Industrial Average US:DJIA settled 256.50 points lower, or 1%, to 25,864.78, while the S&P 500 US:SPX lost 51.57 points, or 1.7%, to close at 2,972.37. The Nasdaq Composite US:COMP finished 162.98 points lower, or 1.9%, at 8,575.62.

What’s driving the market?
“The slide in the oil price, along with further outbreaks of coronavirus across Europe, and the Italian government imposing a lock down across northern Italy and in around the Milan region, has accelerated the rush for the exits in stock markets sending U.S. bond yields to new record lows,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

West Texas Intermediate crude for April delivery US:CLJ20 was down 21% at $32.38 after trading below $29 in earlier action, while May Brent crude UK:BRNK20, the global benchmark, 20.5% to $35.97 a barrel.

Oil futures plunged 10% on Friday after talks between the Organization of the Petroleum Exporting Countries and their allies collapsed with Russia refusing to agree to a Saudi-led plan for additional crude production cuts. In response, Saudi Arabia over the weekend slashed crude prices and is preparing to increase production, in a direct attack against Russia’s market share, The Wall Street Journal reported.

See:An all-out war for dominance has erupted among OPEC and its allies, and now oil investors brace for a race to the bottom on prices

Goldman Sachs analysts on Sunday said a price war could push crude prices toward $20 a barrel especially as the economic slowdown caused by the coronavirus outbreak slows global demand. Those price levels “will start creating acute financial stress and declining production from shale as well as other high-cost producers,” Goldman warned.

Read:Goldman says coronavirus and oil ‘price war’ could see crude plunge into the $20s

“Complete pandemonium at the open” wrote Stephen Innes, chief market strategist at AxiCorp, late Sunday. “The shock-and-awe Saudi strategy will propel oil markets into a period of radical uncertainty. Russia balking was one thing, but Saudi ramping up production is a bird of another feather.”

“U.S. shale and Canadian tar sands are in for a nightmarish year I fear,” wrote Jeffrey Halley, senior Asia Pacific market strategist at Oanda, late Sunday. “Production becoming a battle of who has the deepest pockets.”

On the COVID-19 front Italy virtually locked down its northern region containing about a quarter of its population, on Sunday in an effort to slow the spread of the coronavirus outbreak. Meanwhile, a number of schools closed in California and events were canceled, as a cruise ship hit by coronavirus prepared to dock in Oakland on Monday with authorities preparing plans to transport the 3,500 passengers to military bases around the country for testing and quarantine. As of Sunday, the virus had sickened 107,897 people world-wide, with 3,658 deaths.

There are now 111,284 cases of COVID-19 and 3892 deaths, according to the latest figures compiled by Johns Hopkins University. More than 62000 people have recovered. However, the outbreak in Italy (7,375 cases and 366 deaths) has now surpassed Iran (7,161 cases and 237 deaths) and is nearly as large as the outbreak in South Korea (7,478 cases and 53 deaths) in terms of case count.

Gold futures US:GCJ20 were up 0.3% at $1,677 an ounce after initially soaring to a more-than-seven-year high on haven-related flows.

Asian stock markets plunged Monday, with Tokyo’s Nikkei JP:NIK down 5.1% and Hong Kong’s Hang Seng HK:HSI off 4.2% and the Shanghai Composite CN:SHCOMP down 3%.

European equities were also off sharply, with London’s FTSE 100 stock index UK:UKX down 6.7%, Germany’s DAX DX:DAX off 7.1%. Italy’s FTSE MIB IT:I945 plunged more than 10.2%.

The 10-year Treasury note yield BX:TMUBMUSD10Y was plunging and currently at 0.46%, after finishing Friday at 0.709%, according to Dow Jones Market Data.