3 Min
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Snapshot
Weekly Economic Updates
Caspar Rock: Monday markets - the week ahead on 9 March
- 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.
