Markets: Asia relapses

Markets: Asia relapses

The financial centers of the Asia-Pacific zone relapse this Tuesday morning in the wake of the New York Stock Exchange which fell sharply last night, weighed down by the historic collapse of WTI oil prices in negative territory in view of the arrival at May contracts expire in May! The May light crude US futures contract closed at – $ 37.63, reflecting operators’ panic over plethora of oil stocks and falling demand due to the global coronavirus pandemic.

This morning, despite the pressure that remains strong, the June deadline, now the most processed, goes back up to $ 21, while a barrel of brent peaks at $ 25.30. In the Asia-Pacific zone, the correction is general on the indices with declines of 1.9% in Tokyo, -2.7% in Taiwan and Bombay, -2% in Hong Kong, Sydney yields 1.9%, Shanghai -1.3% with Seoul and Singapore dropped 1.5%.

At the close last night, the Dow Jones index lost 2.44% to 23,650 points, while the broad S&P 500 index dropped 1.79% to 2,823 pts, but the Nasdaq Composite, rich in technological values, has down 1.03% to 8,560 pts. Last week, the three indices rose 2.2%, 3% and 6.1% respectively, climbing to their highest level in 6 weeks.

Since their March 23 low, indices have returned about 25%, supported by strong Fed action, the Trump administration’s $ 2.2 trillion budget support plan, and then by the hope of a ebb of the Covid-19 pandemic and a reopening of the American economy.

However, the new oil crash has clouded the climate on the stock markets, which were already projecting an economic recovery, notably in the United States and in several European countries, including Germany, where containment measures have started to be lifted. this Monday…

OPEC + acted too late and too little!

The price of the May futures contract on US light crude WTI therefore collapsed Monday evening to end at -37.63 $ per barrel (against + 18.27 $ Friday evening), with a view to its expiration on the market American Nymex. The most liquid June contract now readjusts to $ 21 this morning …

At the start of the year, it should be recalled that the WTI was trading above $ 60 a barrel, before the outbreak of the international health crisis which coincided with a price war started between Saudi Arabia and Russia.

This panic on the oil market reflects fears of a saturation of black gold storage capacity, in a market where world demand has dropped by more than 30 to 35% compared to its levels before the epidemic of Covid-19.

The OPEC + agreement to reduce the order of 10 million barrels per day, concluded two weeks ago, was deemed too modest and intervened too late to stop the plunge in prices. At these price levels, a large part of the American and Canadian shale oil industry is in danger of disappearing, given the much higher cost prices. But many other producers within OPEC +, including Russia, will also suffer from such depressed prices …

Donald Trump urged to restart the US economy

Donald Trump announced last week the federal directives for the lifting of containment measures, which will be done State by State … The way out of the crisis promises to be gradual and politically tense, against the backdrop of the US presidential election on November 3. Donald Trump de facto encourages the Americans to deconfine themselves and to restart the economy, provoking the anger of governors of Democratic states, who call for more screening tests, and fear a new surge of Covid-19 in the event of too much relaxation rapid restriction measures.

The United States has now recorded more than 766,000 cases of Covid-19 and more than 41,000 deaths, but signs of a slowdown in new cases and deaths are confirmed, especially in New York. Worldwide, 2.4 million cases have been officially recorded and more than 167,000 people have died from the coronavirus …

© Reuters


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