The S&P/ASX 200 index has started the week on a disappointing note.
In late morning trade the benchmark index has fallen a sizeable 5.2% to 5,892.2 points.
Why is the ASX 200 crashing lower today?
Investors have been hitting the sell button this morning after the escalation of the coronavirus and a collapse in oil prices weighed heavily on fragile investor sentiment.
Over the weekend there were further cases of the coronavirus reported globally. This was particularly the case in Italy, leading to drastic action being taken by its government.
According to the BBC, up to 16 million people in the Lombardy region of Italy have been quarantined in an attempt to contain the outbreak.
Oil prices crash.
A collapse in oil prices on Friday night and then again on Monday morning is also impacting global share markets.
After 10% declines on Friday night, both WTI crude oil and Brent crude oil fell a further 30% this morning when Asian trade commenced.
This has been driven by concerns that Saudi Arabia and Russia are planning to increase their production materially to win market share.
Again Capital's John Kilduff told CNBC: "This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction. The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch."
Goldman Sachs analysts Damien Courvalin agrees. He said: "We believe the OPEC and Russia oil price war unequivocally started this weekend when Saudi Arabia aggressively cut the relative price at which it sells its crude by the most in at least 20 years."
"The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus," he concluded.
It is no wonder then that the shares of energy producers such as Beach Energy Ltd (ASX: BPT), Santos Ltd (ASX: STO), and Woodside Petroleum Limited (ASX: WPL) fell by over 20% this morning.
Bank shares sink lower.
Concerns that this could lead to a credit crunch in the energy sector has sent bank shares sinking lower as well.
Commonwealth Bank of Australia (ASX: CBA) and the rest of the big four banks are all trading at least 4% lower in late morning trade.
And it isn't just the ASX that is tumbling. Share markets across Asia are deep in the red and futures contracts are pointing to heavy declines on Wall Street tonight.
At the time of writing the Dow Jones is set to open 4.2% lower, the S&P 500 is due to open 4.8% lower, and the Nasdaq is set to fall 4.5% at the open.
