Oil plunges, stocks look like “incredible bargains”

Markets were mixed on Monday.

The S&P 500 fell 1.8 percent and the Nikkei 225 fell 1.2 percent but the STOXX Europe 600 rose 0.7 percent.

Oil prices plunged. West Texas Intermediate crude for May delivery fell to negative US$37.63 a barrel.

Louise Dickson, oil markets analyst at Rystad Energy, explained that “midstream players are now paying ‘buyers’ to take oil volumes away as the physical storage limit will be reached”.

Brent crude fell 8.9 percent.

Meanwhile, US stock market investors are bracing for the worst quarter for earnings since the 2008 financial crisis. Results for the first quarter are on track to decline 14.5 percent from a year ago, according to John Butters, senior earnings analyst at FactSet, and analysts expect a 28.7 percent decline in the second quarter.

Still, some analysts think stocks are becoming bargains.

John Cunnison, chief investment officer at Baker Boyer, said “if we look back at this moment in three years, it probably will look like a fairly attractive place to buy”.

Similarly, Mark Mobius, co-founder of Mobius Capital Partners, said that he is “very optimistic” markets will bounce back after creating “incredible bargains”, although he also warned that stocks could retest the March lows.

Howard Marks, co-founder of Oaktree Capital Management, also warned of further declines in the market. “We're only down 15% from the all-time high of Feb. 19,” he said Monday on CNBC. But “it seems to me the world is more than 15% screwed up”.