26 June 2017
Bassanese Bites: Oil Slick – Week beginning: 26 June 2017
It was another modest week for global equities overall as a sharp drop in oil prices took the wind out of the energy sector. Despite OPEC’s extended production cut agreement, rising supply – not only in the US but Nigeria and Libya also – continue to keep the market awash in oil. On a brighter note, the technology-led NASDAQ-100 rebounded after recent weakness, and the health care sector was buoyed by hopes of a new health-care “reform” package winding its way through the US Congress.
Also supporting risk sentiment generally is the fact that bond yields and the $US dollar remain dormant as recent downside surprises on US inflation (largely due to lower energy costs) has raised doubts on whether the Fed will raises rates any further this year. As it stands, the markets now judges a Fed rate hike by December as only a 50-50 chance.
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