SNAPSHOT2 min read

Caspar Rock: Monday markets - the week ahead on 9 March

A shock fall in the oil price has taken a heavy toll on global equity markets, adding to uncertainty surrounding the coronavirus.

09/03/2020
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Authors

Caspar Rock
Chief Investment Officer
  • The failure of OPEC to reach an agreement on production cuts on Friday in Vienna, with Russia refusing to play ball, led Saudi Arabia to announce a surprise increase in production to target market share as a punishment.
  • This has pushed oil prices down to levels at or below the breakeven point of both Russian producers and the US shale industry.
  • We have seen a sharp fall in equity and credit markets (especially US high yield which has a significant energy exposure), alongside a sharp rally in government debt markets and gold.
  • Although oil and COVID19  will be the centre of attention this week, you may see further government and central bank action after last week's off-cycle rate cut in the US.
  • Typically the oil market recovers rapidly following a supply-side shock such as the one we are witnessing, but the unknown impact of COVID-19 will lead to further uncertainty.

Authors

Caspar Rock
Chief Investment Officer

Topics

The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.