Quote of the Day
One can never consent to creep when one feels an impulse to soar.
Oil continued to be under pressure throughout most of Tuesday's session as did the majority of risk asset markets. The view that the global economy is slowing and the European sovereign debt issues may be a problem once gain were the primary price drivers for all risk asset classes including the oil complex. The evolving geopolitics in the Middle East played a minor role in yesterday's trading and continued to act as a put or floor in the price of oil. The rhetoric is bound to ratchet up over the next few days leading up to the April 13/14 meeting and as such the oil complex will likely have limited downside for the next several days. The outcome of the meeting will set the stage for how oil prices trade over the coming months insofar as how the market views the risk of military action in the region.
The downside correction in global equity markets continued throughout Tuesday's session but seems to have slowed as of this morning. The EMI Global Equity Index (table below) is now down by 2.7% for the week narrowing the year to date gain to 7.3%. The Index has given back over half of the gains for the year and is now back to where it was in the second half of January. Canada has now moved into negative territory for the year with London hovering near the unchanged level. Germany and Japan remain the only two bourses in the Index those are still showing double digit gains for the year. The downside correction is all about a growing view that the global economic recovery is slowing in both the developed and emerging market world. The market is currently is a bit oversold and I would expect the downside correction to subside in the very short term but unless the upcoming macroeconomic data starts to point toward an increase in the rate of growth of the global economy most equity bourses will be susceptible to further moves to the downside.