The pause in trading follows a failed oil production agreement between OPEC and Russia. This saw the price of oil plummet and consequentially caused the FTSE 100 to drop as much as 8.5% when markets opened in London.
A meeting was initially organised between OPEC and Russia to discuss the fall in demand for oil driven by the spread of coronavirus.
Some 3.6% of the S&P 500 is in the energy industry. In tandem with investor uncertainty regarding the coronavirus, the index fell below the NYSE’s performance threshold of -7%, bringing trading to a standstill.
The NYSE has three levels which can impact trading within trading hours, including:
Level 1: If the S&P 500 falls below 7%, trading will pause for 15 minutes
Level 2: If the S&P 500 falls below 13%, trading will pause for a further 15 minutes
Level 3: If the S&P 500 falls 20%, markets will close for the day
Robert Alster, head of investment services at Close Brothers Asset Management, commented: “A fall in oil prices is often a boon for the consumer, cutting fuel costs, but Covid-19 has caused a decline in demand.
“This has caused wider concern around economic growth, and central banks have had to step up to show they will support liquidity.”