Positive economic data continues to push markets
Global equities and commodities, including oil, are performing strongly as positive data from Europe extends the stream of positive economic data. Factories in Europe are struggling to meet still very high demand. Manufacturing numbers in Asia also point to growth, despite some new local outbreaks of the coronavirus. A day after the markets in the US and the UK were closed for holidays, they are reorienting sharply upwards today. US Treasuries continue to fall, while the dollar is currently stable at low levels. Commodity prices have overcome the brief period of weakness and are again rising significantly. Rising commodity prices will also increase price pressure (and thus inflation). After most investors assumed a deal with Iran (we did not), the oil price has now risen significantly again (as we forecast) and has reached a two-year high. OPEC+ meets today to discuss oil production levels.
While the market again went into several profit taking and panic selling waves, both in equities and oil (and cryptocurrencies), we remained calm and made the right decisions – even when again positioning us against the market. We are very well positioned and I expect the (US) markets to continue their positive performance today and continue to trend towards May highs and Eurozone stocks to reach new record levels. The reopening of the economies in Europe and the US continue to drive gains, especially in the cyclical sector, which are leading the gains in US pre-market trading today. Especially the energy sector and materials sector, as well as travel related stocks are performing strongly. Although inflation figures continue to show relatively high inflation, more and more investors also seem to see this as something positive and as a result of a strong recovering economy. Focus this week will also be on new labor market data with the NFPs as the highlight on Friday. I expect OPEC+ to maintain the current path of only gradually lifting production restrictions – which will provide further tailwinds to oil prices, which are already receiving support from the expectation that demand (and demand growth) will outpace supply (and supply growth).