Oil and equities slide, OPEC + decline does not boost confidence

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TOKYO (Reuters) – Oil prices and US equity futures plunged into trading Monday morning after a historic OPEC and allies deal to cut production by record amounts failed not given investors reason to be optimistic about the economic outlook in the long term.

FILE PHOTO: A pedestrian wearing a facial mask walks near a viaduct with an electronic map showing information on stocks, following a coronavirus epidemic (COVID-19), in the financial district of Lujiazui in Shanghai , China, March 17, 2020. REUTERS / Aly Chanson

The US mini S&P 500 EScv1 futures contract fell 1.54%, wiping out a brief gain to a month-high high just after the start of trading.

Nikkei futures traded in Chicago NIYc1 suggest the Tokyo .N225 benchmark should slide about 0.2%.

The CLc1 crude oil futures contract fell 0.4% to $ 22.67 a barrel as it quickly wiped out previous gains to reach the lowest level since April 2.

Brent LCOc1 futures fell 0.67% to $ 31.27 a barrel to $ 33.99.

A group of oil-producing countries known as OPEC +, which includes Russia, said it had agreed to cut production by 9.7 million barrels per day (b / d) for May-June , after four days of talks on the marathon.

A more important question for investors, however, is whether the new coronavirus pandemic, which has ravaged global economic growth, will soon peak in the United States and Europe, as expected.

“As the panic sale we saw last month has waned, few investors would like to continue rising stock prices as we are about to see more signs of an economic slowdown,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

OPEC + said in a draft statement seen by Reuters that it expects total global oil cuts to amount to more than 20 million bpd, or 20% of global supply, counting May 1st.

This includes contributions from non-members, larger voluntary reductions from some OPEC + members, and strategic purchases by the world’s largest consumers, sources said.

However, this does not fully compensate for an estimated drop of 30 million barrels per day in global fuel consumption caused by the COVID-19 pandemic.

“In the short term, the WTI could hold more than $ 20 after the deal, but it could fall below that level unless all countries follow their words in action,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

Also at the center of attention this week, US companies are announcing their earnings, starting with the big banks, and China is releasing its trade data on Tuesday and closely monitoring the gross domestic product data on Friday.

On the foreign exchange markets, risk-sensitive currencies were more flexible while the safe haven dollar and the yen found support.

The Australian dollar lost 0.3% to $ 0.6303 AUD = D4 while the Mexican peso fell 0.4% to 23.430 for one dollar MXN = D4.

The euro remained stable at 1.0934 $ EUR = and the yen gained 0.15% to 108.34 per dollar JPY =.

Our standards:Principles of the Thomson Reuters Trust.

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