This after a modest 10% rebound that occurred over the past month reiterating the point that the nation is far from bottoming out as many would like to expect but also the height of volatility currently being experienced due to the uncertain times.
Shanghai will set the stage tomorrow for a meeting by G20 finance ministers to discuss ways of curtailing risks being faced in the global financial system presently which ironically takes place in the backyard of the main contributor which puts pressure on Beijing to put up a show of confidence amongst other leaders that would be suffice to downplay such risks.
In an often complex world of trading where "magical indicators" rule the day the best strategy in interpreting what the market is saying boils down to simplicity. If one considers that the Shanghai Composite took a month to regain 10% of its losses only to give them back in a single trading session, it doesn't take a genius to figure out that sellers are in full control of the direction the market is headed to and it would be wise to project targets to levels of the underside and not the upside.
If we take into account that valuations remain at lofty levels even after the dramatic fall off in price of stocks one could argue that perhaps more downside is the order of the day and trying to find substance that says otherwise would be foolish. The trend is firmly set whilst debates rage on over the variability of returns with the much anticipated comeback failing to materialise.
— CNNMoney (@CNNMoney) February 25, 2016Bickering in OPEC hurts the chances of a recovery in oil prices
An agreement between Saudi Arabia and Russia to freeze oil output at January levels came as a relief to the market but the legitimacy of the plan is coming under heavy scrutiny after tensions rose as Iran stated that it would not follow the actions of fellow OPEC members in halting production. Relations between Riyadh and Tehran has been growing since the execution of a prominent Shiite that prompted Iranian nationals to torch a Saudi Arabian embassy in Tehran.
Iran presents the most problematic risk to the oil body as sanctions have recently been lifted allowing the country to begin international trade again after an extended absence that crippled its economy. However the intentions of Saudi together with OPEC do not fall parallel to the aspirations of the Iranian government causing friction and putting serious doubts over the continuity of the collusive agreement.
Saudi Arabia, currently the second largest producer of oil after Russia, stands to lose significant market share if it were to cut deeply into its own production that could dramatically shift the leadership of the oil body out of its hands and into those that cast a shadow over the current status quo. Although it may have lost significant share already in its battle against shale gas producers, the Arab nation prefers to be a friend of the West rather than a nuisance.
As things stand a freeze in output wouldn't do much for the price of oil as the quantities of product lying on the surface would require a huge spike in demand to mop it all up which seems very unlikely given the deary outlook of the global economic climate. So as much as the move was in the right direction more needs to be done to see a proper recovery in oil prices.
In the wake of the 1980s plunge, oil prices stagnated for nearly two decades https://t.co/gR226ROcjG— Real Time Economics (@WSJecon) February 25, 2016
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