The last 24 hours has featured a sea of red ink right across global market over night and Australia hasn’t avoided the carnage with the S&P/ASX 200 (ASX:XJO) plunging 2.5% or 132 points to close at 5221 points today.

The gold sector was the only index that demonstrated any resilience on Tuesday as the flight to safe haven stocks unfolded.

The S&P/ASX All Ordinaries Gold Index (ASX:XGD) surged 132 points to close at 7049 points with strong performances from low-cost producer Evolution Mining (ASX:EVN) and other large producers such as Regis Resources (ASX:RRL) and Northern Star Resources (ASX:NST).

These companies were all up between 4% and 5%.

At the other end of the spectrum, the IT sector was hard hit as the S&P/ASX 200 Information Technology Index (ASX:XIJ) fell nearly 5% or 59 points to close at 1157 points.

While the XJO ended the day at a level close to a point that proved to be a springboard for the index on April 8 as it surged about 160 points in a day, it is difficult to see that happening on Wednesday given the state of overseas markets which saw the Dow plunge more than 600 points.

Indeed, the ASX SPI200 is pointing to another fall of circa 2%, currently standing at 5092 point, implying a decline of 107 points.

Some important data will be released today in Australia which may well impact markets, including skilled vacancies and retail sales, providing a better feel for the unemployment situation, the health of the retail sector and consumer confidence.

24 hours

Looking at how the last 24 hours played out, markets in Asia that trade in a similar time zone to Australia were also hard hit.

The Nikkei 225 plunged 2% or 388 points to close at 19,280 points. The Hang Seng fared worse as it fell 536 points or 2.2% to close at 23,793 points. The Shanghai Composite which comprises blue-chip type stocks fell 25 points or 0.9% to close at 2827.

When UK and European markets opened, all roads lead south.

The FTSE 100 closed at 5641 points, its lowest point for the day, representing a decline of about 3% or 172 points.

Mainland European markets were even harder hit with 4% wiped off the DAX as it plunged 426 points to close at 10,250 points. The mood was no different in France with the CAC 40 falling 3.8% to close at 4350.

On the political front, the US Senate approved a circa $500 billion aid package for small businesses and hospitals hit hard by the coronavirus pandemic, setting up a vote in the House of Representatives, and President Trump has indicated that he will support the measure.

Perhaps overshadowing this development though was Trump’s evening address where he said that he would aim to ban immigration for a 60-day period, citing a need to focus on American workers due to COVID-19’s impact on business activity.

Oil and tech weigh on Dow

Similar to Australian markets, tech stocks were some of the hardest hit as the Dow plunged 632 points or 2.7% to close at 23,018 points. These included the likes of Merck (-5.5%), Intel (-4.8%), Cisco Systems (-4.7%) and Microsoft Corp (-4.1%).

As a supplier of equipment to the beleaguered energy sector, the 4.1% plunge in Caterpillar Inc’s shares is of no surprise.

Harking back to the tech sector though, the negative sentiment towards those stocks was reflected in the performance of the NASDAQ, the worst performing index, plummeting 3.5% or nearly 300 points to 8263 points.

Even the S&P 500 which tends to be a little more resilient was sold off as it fell more than 3% or 86 points to close at 2736 points.

The oil conundrum

It is somewhat difficult to get a handle on the oil sector at the moment, but suffice to say the industry is in a state of disarray.

Generally speaking, refineries are at capacity leaving no room for new production and demand is dwindling due to inactivity from businesses and consumers.

While yesterday featured much hype about the West Texas Intermediate Crude Oil Contract for delivery in May as it fell into negative territory, this type of activity is representative of highly volatile futures trading.

As expiry dates draw nearer, it is quite normal for volatility to increase as desperation to cover long or short positions drives prices higher or lower at a more exaggerated clip.

As we said yesterday, the Brent crude price only came off 5% to close at US$26 per barrel.

However, it was also hit hard in the last 24 hours, falling from about US$26 per barrel to about US$18 per barrel before rallying on the Wall Street bell to close in the vicinity of US$20 per barrel.

It was interesting to see the performance last night of longer dated contracts after the heavily sold off May contract expired.

As a guide, West Texas crude for June delivery (US:CLM20) fell 35% to US$13.24 barrel and WTI for September delivery fell 16% to US$24.99 per barrel.

All the big falls are obviously significant and are real headline makers, but arguably of more importance is the need to compare June delivery and September delivery WTI as it undeniably underlines the extreme volatility that can be read into a situation when only short term data is evaluated.

That said, companies with fragile balance sheets that can’t weather a three to six months storm are likely to come under intense selling pressure.

Gold shines bright

In the flight to safe haven investments, gold received support and it is now back above US$1700 per ounce.

The iron ore price fell sharply overnight, coming off 3.5% to US$84.37 per tonne.

This could place pressure on our big miners today, particularly Rio Tinto (ASX:RIO), BHP Billiton (ASX: BHP) and Fortescue Metals Group (ASX:FMG).

The situation was also dour on the base metals front with copper, nickel, zinc and lead all losing ground.

With regard to currencies, the Australian dollar is fetching just under US$0.63 with significant selling pressure occurring throughout the night.