WASHINGTON (Reuters) – Asia shares were poised to track a Wall Street tumble on Tuesday after U.S. crude futures turned negative for the first time in history, crushed by a spectacular collapse in oil demand as the coronavirus pandemic derails the global economy.

FILE PHOTO: A pedestrian wearing a face mask walks near an overpass with an electronic board showing stock information, following an outbreak of the coronavirus disease (COVID-19), at Lujiazui financial district in Shanghai, China March 17, 2020. REUTERS/Aly Song/File Photo

Global equity markets slid and bond prices rose as traders dumped the expiring crude futures for May, leading the contract to plunge 306% to lows never before seen.

“This is clear evidence of demand destruction,” said Michael McCarthy, chief strategist at broker CMC Markets in Sydney.

“It’s not just relevant to energy markets, this very clear evidence of economic damage is very likely to dampen sentiment.

May futures settled at minus $37.63 a barrel. Over the course of the day prices declined $55.90 a barrel and sank as low as $40.32.

The June contract for West Texas Intermediate, the U.S. benchmark, settled at a much higher $20.43 a barrel.

North Sea Brent, the international benchmark, was at $25.95, down 7.59% on the day.

(GRAPHIC: U.S. crude oil’s historic crash below zero – here)

In equities markets, Japan’s Nikkei futures were up 0.52% at 23:19 GMT while Australian S&P/ASX 200 futures were down 0.99% at 20:59 GMT.

The Nikkei 225 index closed up 3.15% at 19,897.26​​​ on Monday. The futures contract is down 2.02% from that close​.

MSCI’s gauge of stocks across the globe shed 1.15%, following broad declines in Asia and slight gains in Europe driven by the healthcare sector.

On Wall Street, the Dow Jones Industrial Average fell 592.05 points, or 2.44%,to 23,650.44. The S&P 500 lost 51.4 points, or 1.79%, to 2,823.16. The Nasdaq Composite dropped 89.41 points, or 1.03%, to 8,560.73.

Even with Monday’s decline, the S&P 500 has rallied 26.1% from its March low, thanks in part to the extreme easing by the Federal Reserve and a $2.3 trillion stimulus package passed by Congress.

Yet analysts are likely underestimating the impact of the global economic lockdown on corporate earnings, some argue.

The United States has by far the world’s largest number of confirmed coronavirus cases, with more than 750,000 infections and over 40,500 deaths, according to a Reuters tally.

The debate over when to lift restrictions to curb the pandemic intensified in the United States, with protesters describing mandatory lockdowns as “tyranny” and health workers and officials portraying them as a matter of life and death.

In Washington, lawmakers were squabbling over a possible $450 billion-plus deal to provide more aid to small businesses and hospitals hurt by the crisis. Senate Republican leader Mitch McConnell said a vote could take place on Tuesday.

U.S. President Donald Trump described the historic crude price drop as short-term and stemming from a “financial squeeze,” adding the administration would consider stopping oil shipments from Saudi Arabia to lift the market.

The dollar edged higher as tumbling crude prices pressured oil-linked currencies.

Bond markets suggested investors expect tough economic times ahead. Benchmark 10-year notes last rose 12/32 in price to yield 0.6179%, from 0.656% late on Friday, compared with 1.91% at the start of the year.

Selling pressure on Italian government bonds has returned in the past week, undoing some of the benefits of the European Central Bank’s massive bond-buying scheme, after euro zone politicians failed to agree to common debt issuance as a means of addressing the crisis.

Meanwhile, Italian Prime Minister Guiseppe Conte on Monday repeated calls for the EU to issue common euro zone bonds to demonstrate the bloc’s solidarity.

Reporting by Katanga Johnson in Washington and Herb Lash in New York; Editing by Sam Holmes

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