Oil pricesremain the focus for financial markets because oil is one market that governments and central banks have no answer for as an uncommon cross to bear of a sudden drop in demand, and continuing supply glut is wreaking havoc across the complex.
Energy marketsare in turmoil and have moved well beyond the logistics of super contango. Bulls are in the death throes of pricing in an enormous front-end settlement risk for June, and we are only a couple of days into the contract taking over front-end status. Cut or roll forward appears to be the cry from oil pit Carnarium as ever price taker of oil is now coming to terms that there is no place to store June WTI other than perhaps your neighbors swimming pool.
Marketsmixed in Asian with equities and US Futures bouncing off early lows despite flagging oil prices probably because energy accounts for just 2.77% of the S&P 500. Still, lower oil prices could help to stimulate the global economy when both the EU and US market emerges from lockdowns. Not to mention when the colossal oil importer economies in Asia (China-India and South Korea) industrial engines start to fire on all cylinders. Mind you, if we move deep into single digits on WTI, I expect that silver lining view to fray at the edges a touch from shock value alone.
China regulators tried to paint the tape greenby stepped up efforts to boost lending to the struggling SMEs that contributed more than half of the country's GDP and thumped by the COVID-19 outbreak.
Europeis looking up 1% early with a very mixed tape in terms of sector dispersion. But I think the market could be prone to a bit of flip flop as the rout in oil prices does have more full ramifications for other asset classes.
The general viewin wonderland is that short covering is losing its impact. As we move into month-end with market leadership far from broad-based suggesting a lack of stock dispersion and with a possible ETF rebalancing, we could see the SPX veer below. 2700.
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