It was Markinn with the kingdom of Gilden that had the Death Demon, so it couldn't have been any empire specific spell. When the battle started I had 0 morale, before any spell was even cast.
Strangely enough, using auto battle worked fine, the battle completed with minimal losses on my side. The only problem was in tactical combat, where I could do nothing on any round past the first.
I really wish I could autobattle to skip all the slow animations, but sometimes the AI is doing god knows what. I've had times where I've lost my entire army in an autobattle, then reloaded and did tactical and finished without losing a single hit point on a single unit of mine. Unfortunately, I'm at a battle like that currently in the game and I have a really hard time motivating myself to do tactical and finish it out.