Fears of a deep downturn are rattling markets despite stimulus packages in US, UK and the eurozone
Fears of a deep global recession are driving the oil price down again today.
US crude has dropped nearly 4% to $25.83 per barrel, which looks to be the lowest since 2003.
European stock markets are also under pressure, with the Stoxx 600 index down 3.3% and Germany’s DAX has dropped 4.7%.
That’s a disappointment for investors, who saw stocks jump yesterday.
The fact that markets keep shrugging off the stimulus measures reflects the deep uncertainty about the economic damage about to be done. But these moves are not the 7,8,9,10% type swings. This is better – smaller daily swings are the first step to stabilisation before we can start to look at the bottom being in.
For now every rally is sold into, every financial relief effort is an opportunity to get out from positions long held. The market is behaving extremely short-term in its outlook, whilst the long-term effects are entirely unclear. The Vix remains elevated at 75, though somewhat off its highs around 85 after Wall St bounced yesterday.