US and European equities closed firmly higher on Monday, despite rising anxieties about the GDP data due later this week.
Stocks in Asia
traded mixed. The Nikkei (-0.28%) and the ASX 200 (-0.50%) retreated, while Shanghai’s Composite (+0.11%) and Hang Seng (+0.77%) recorded
moderate gains.
FTSE (+0.17%) and DAX (+0.33%) futures hint at a modest positive start in Europe, while US futures point at losses in New
York.
Energy stocks will likely hand back yesterday’s gains following a 25% slump in WTI crude amid the US Oil Fund suddenly moved from June
to July 2020 - June 2021 contracts, due to limits imposed by regulators and its broker. WTI crude traded at $10 a barrel, and downside risks
prevail. One big problem with oil is that no one wants or needs it now. Therefore, at the end of each month contract, we could see major price
swings to the downside as investors will liquidate their positions to avoid the physical delivery. And we know that the oil price could fall
to deeper negative levels than we have seen with May contacts; there are rumours that a slump to -$100 a barrel is possible. Under these
circumstances, the medium to long term investors are nowhere to be found. Hence, the oil market is left in the hands of short-term traders,
and the price volatility is here to stay with a clear positive skew to the downside.
By Ipek Ozkardeskaya
