Oil giveaway spells doom, brings out market bears | Malay Mail

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SHANGHAI, April 22 — The crash in US crude prices has turned a reliable commodity less than worthless and given fresh urgency to bearish voices, who say it sounds alarm bells for global growth and are bracing for a catastrophic collapse in asset prices. Markets are already unnerved at the spectre...

Pump jacks drill for oil in the Monterey Shale, California April 29, 2013. — Reuters pic

But some market participants believe the transformation of"black gold" into a liability is more than a bet gone wrong, and rather heralds a new round of deflation and financial destruction as the Covid-19 pandemic wrecks the world economy. The crash has already knocked the wind from a rebound rally that has taken the MSCI World Index up more than 20 per cent from March lows, sending Asian shares on their steepest tumble in a month and US stocks sliding two days in a row.

Trading losses can quickly spread risks outward to banks, who are likely to respond by lending less, he said. “Ultimately, this virus has to get fixed before oil can make any kind of recovery,” said David Winans, principal, US investment grade credit research at PGIM Fixed Income. While crude futures prices collapsed and millions of Americans have lost their jobs so far this month, the S&P 500 stock index has rallied over 20 per cent from last month's lows despite estimates for a recession sharper than the Great Depression.

 

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