The next few days will be very volatile, yet interesting to observe for the world economy. The STI dropped steeply last month. It picked up about 400points in the last 1-2 weeks. It is still trading just below 2,600 currently.
Last week, OPEC collectively agreed to lower oil production with lower global demand. That provided some degree of stability for oil prices. But global demand feel even below the agreed production level. This led to US oil prices to plunge below zero for the first time in history yesterday.
New Zealand is beginning to gradually lift lockdown measures from next week. Residents can travel within the country. Airline bookings suddenly shot up. With this, surely demand for oil will rise again? It is anyone’s Guess. On the one hand, New Zealand is only a small country relative to the other economies. But if it is able to spur demand again, there is hope that boom time can come to the other countries soon if they are disciplined to manage the covid-19 outbreak like New Zealand.
The next few weeks will really be interesting for the world economy….