Stocks in Asia saw steep declines on Monday morning as oil prices plunged amid fears of a price war after OPEC failed to strike a deal with its allies on production cuts, adding to market volatility already brought about by fears surrounding the ongoing coronavirus spread.

The Nikkei 225  in Japan fell 5.7% in morning trade, while the Topix was down 5.7%.The Japanese yen, often seen as a safe-haven currency, traded at 102.27 per dollar after seeing levels above 108 last week.

Hong Kong’s Hang Seng index plunged 4.03% in early trade. Mainland Chinese stocks also saw declines, with the Shanghai composite down about 1.9% while the Shenzhen component shed 2.03%. The Shenzhen composite slipped 1.661%.

South Korea’s Kospi also dropped 3.85%. 

Meanwhile, stocks in Australia tanked, with the S&P/ASX 200 down 5.97%. Singapore Straits Times Index also fell more than 3.5%.

Overall, the MSCI Asia ex-Japan index fell 3.77%. 

The moves came as the yield on the benchmark 10-year U.S. Treasury note fell below 0.5%, last trading at 0.4857%. The 30-year Treasury yield also hit a record low, breaching the 1% threshold for the first time in history, last trading at 0.9685%. 

U.S. futures also saw sharp declines on Sunday night stateside. Futures on the Dow Jones Industrial Average plunged 1,135 points, pointed to a more than 1,100-point loss at Monday’s open. S&P 500 futures and Nasdaq-100 futures also pointed to declines for the two indexes when they open on Monday.

Oil prices plunge; OPEC+ ‘looks dead’

Oil prices were watched by investors on Monday. In the morning of Asian trading hours, the international benchmark Brent crude futures contract fell 25.29% to $33.82 per barrel after earlier tumbling 30%.

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U.S. West Texas Intermediate (WTI) crude futures also fell sharply by 25.87% to $30.60 per barrel. WTI is on pace for its worst day since January 1991 during the Gulf War.

The moves came after Saudi Arabia announced massive discounts on Saturday to its official selling prices for April, with the kingdom reportedly preparing to increase its production above the 10 million barrel per day mark, according to Reuters.

Saudi Arabia’s price cut followed a breakdown of talks in Vienna last week between OPEC and its allies, known as OPEC+, during a Friday meeting. The cartel had recommended additional production cuts on Thursday, but that was rejected by OPEC ally Russia on Friday.

The meeting also concluded with no directive about the production cuts that are currently in place, but set to expire at the end of the month. That effectively meant that nations will soon have free rein over how much they pump.

“OPEC+ alliance looks dead after OPEC failed to reach an agreement with Russia on further production cuts,” Daniel Hynes and Soni Kumari, commodity strategists at Australia and New Zealand Banking Group, wrote in a note dated Mar. 9.

Hynes and Kumari said the current production cuts “managed to support prices by keeping the market relatively balanced through a tumultuous period in the oil market.”

“We now see the likelihood of production rising from OPEC+ members relatively high, even before the agreement (officially) expires,” they said. “Russia stands out as the most likely to ramp up in the short term. Some of the smaller OPEC producers are also expected to raise output.”

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The worries over oil prices come as investors have already been jittery over the global spread of the coronavirus that has infected more than 106,000 and taken at least 3,639 lives worldwide, according to the latest figures from the World Health Organization.

Chinese trade data released over the weekend showed the country’s January-February overseas shipments contracting 17.2% from the same period a year before, marking the steepest fall since February 2019, according to Reuters. Analysts polled by Reuters had projected a 14% drop as the coronavirus outbreak disrupted supply chains and dampened demand.

Reuters also reported that China reported a trade deficit of $7.09 billion for the period, versus an expected surplus of $24.6 billion.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 95.371 after earlier touching its lowest level in more than a year.

The Australian dollar changed hands at $0.645 after an earlier high of $0.663.

In economic news, Japan’s economy shrank an annualized 7.1% in October-December, according to data from Japan’s Cabinet Office released Monday. That was a larger decline than the first preliminary estimate of a 6.3% annualized shrinkage. It was also worse than economists’ median forecast of a 6.6% contraction and the biggest fall since April-June 2014, according to Reuters.

— CNBC’s Pippa Stevens and Christine Wang contributed to this report.