The week to Tuesday’s close saw little movement in global equity markets with the UK (FTSE100 Index) rising 0.8% and the US (S&P 500 Index) falling 1.7%. While the UK market has marked time recently after its recovery from the March lows, the decline in the US came as investors took profits in a market that had a stronger recovery, gaining just over 50% of its fall from its February highs. Along with others we had been looking for a rally of 30% to 50% of the fall and with that move now complete expect the market to consolidate as investors await developments.
The price of oil hit the headlines again during the week as demand from motoring, aviation and shipping continued to fall. Recent production cuts agreed by OPEC have been insufficient to reduce supply far enough and with storage facilities in Texas fast approaching capacity holders of the Futures contract for May delivery were actually forced to pay buyers to avoid taking delivery of the oil. Although this is to some extent a technical position it has led to a significant fall in the price of crude oil, with the price of Light Sweet at $11.57 some 82.7% lower than a year ago. The price of a barrel of Brent at just $19.33 has fared little better, falling 68.3% on the year. The expectation is that the low price is temporary but while it is low the lower cost of petrol and heating oil puts much need cash back in the hands of the consumer and is a positive for the economy.