AFP – Oil prices rallied yesterday, helping boost equity markets on fresh tensions between the US and Iran but investors continued to fret over the uncertain economic outlook despite the Coronavirus pandemic showing signs of slowing.
With devastation wrought on economies around the world, some governments are turning their attention to easing tough restrictions that have been imposed on billions of people for the past weeks.
But observers say the route out of the crisis remains uncertain, while the head of the World Health Organization warned the end was still a long way off.
“Make no mistake: we have a long way to go. This virus will be with us for a long time,” Tedros Adhanom Ghebreyesus told a virtual news conference.
Wall Street jumped yesterday, tracking a surge in oil prices that saw WTI for June delivery jump 19 percent.
The commodity extended gains in Asian trade, with WTI climbing more than 14 percent at one point and Brent adding almost 12 percent before easing slightly.
The surge came after a tough week on oil markets, with WTI for May delivery crashing below $0.00.
Phillip Futures cited “heightened risk in the Middle East” after US President Donald Trump said on Twitter he had “instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea”.
Iran, meanwhile, said it put its first military satellite into orbit. Washington alleges the space programme is a cover to develop ballistic missiles.
The tensions offset news of another surge in US stockpiles, including at the Cushing, Oklahoma hub where analysts say there is little remaining space.
Phillip Futures, however, said the Trump tweet was likely a move to boost prices because US shale had been badly hit by the oil crisis.
With demand for the commodity almost non-existent and facilities close to full, expectations are for more volatility to come.
Still, Asian markets enjoyed a welcome advance. Tokyo, Mumbai and Jakarta were all more than 1 percent higher, while Seoul put on 1 percent and Hong Kong gained 0.5 percent.
Taipei, Singapore, Manila, Bangkok and Wellington were also higher, although Shanghai and Sydney both slipped slightly. London, Paris and Frankfurt were all up in early trade.
Global markets had been enjoying a healthy rally in recent weeks, thanks to trillions of dollars of stimulus and signs of slowing in the disease that had allowed leaders to consider easing lockdowns.
But the oil crisis and concerns about the length of the global economic recovery have brought dealers back to Earth following weeks of big gains.