The craziest exchanges in the history of the oil market have continued, the Brent benchmark falling another 10% to 17 dollars per barrel, after plunging 24% the day before after American crude prices became deeply negative.
With coronavirus closings reducing demand for everything from gasoline to jet fuel, and markets further inflated by a turf war waged by Saudi Arabia and Russia, places to store excess supply exhaust.
Christopher Peel, CIO of Tavistock Wealth, said eight oil supertankers were now moored on the river outside his window in the Portuguese capital, Lisbon.
“There is nowhere to put oil, so it should not surprise anyone that the first months (oil price contracts) are decimated,” he said, although he said it should be a temporary situation.
In the meantime, it is encouraging to note that the major European stock markets have opened higher after an overnight close in New York and a mixed day for Asia.
Emphasis has been placed on whether EU leaders, who meet on Thursday, can agree on more aid to help the region’s economies cope with the coronavirus epidemic.
The pan-European STOXX 600 index was up just over 1%, after falling more than 3% on Tuesday after the collapse in oil prices.
Italian stocks rose 1.3% and government bond yields fell after Prime Minister Giuseppe Conte said Italy, one of the countries hardest hit by the pandemic, may begin to recover. withdraw strict home support orders starting May 4.
Traders were also supported after Italy cleared a large debt sale on Tuesday and speculation continued that the European Central Bank would provide more support.
“It is not surprising that we see (bond yields falling) today,” said DZ Bank strategist Sebastian Fellechner, citing the conclusion of the jumbo bond sale in Italy.
“Brent is stable this morning … this is also reflected in the government bond market, as spreads stabilize and (basic) yields are slightly higher this morning. “
Germany’s 10-year yield rose 2 basis points to -0.46%
The yield on five-year US Treasuries also rose to 0.33% after hitting a record low of 0.3010% on Tuesday. The 10-year bond yield was 0.561%, near the lowest since March 9 when the panic buy pushed it to an all-time high.
MAGIC MONEY FORESTS
While a Reuters report shows that there have been more than 2.5 million cases worldwide of COVID-19 respiratory disease caused by the new coronavirus, $ 500 billion in additional relief has been donated to the ‘American economy, and the governors of half a dozen American states are planning to reopen the business.
Restrictions are temporarily lifted in many other countries, and many others are releasing stimulus measures. The South African president pledged on Tuesday a $ 26 billion bailout package for his country’s economy, which was suffering from anemic growth even before the coronavirus epidemic.
Mexico unveiled a $ 31 billion package and cut its benchmark rate by 50 basis points. South Korea has prepared a third supplementary budget and a $ 32.4 billion fund to support its economy.
“If the global economy can reopen in about eight weeks, the damage is done (to the stock markets), but the longer-term damage is happening in the bond markets,” said Peel of Tavistock.
US stock futures had rebounded to rise about 1% after Tuesday’s fall.
In the currency market, the dollar stabilized after rising when investors fled oil-related currencies such as the Norwegian krone, the Russian ruble and the Canadian dollar.
The safe haven yen remained at 107.79 against the dollar while the Swiss franc hit a five-year high against the euro at 1.05255 franc. The Norwegian krone and the ruble both recovered, and the Australian dollar rose 0.8% after a record surge in retail sales last month, spurred by panic purchases.
Edition by Timothy Heritage
Our standards:Principles of the Thomson Reuters Trust.