Global stocks found it challenging to claw back losses after the oil market shock on Tuesday. It wasn't just energy-related companies that suffered. The fact that futures for domestic West Texas intermediate crude oil turned negative for the first time in history speaks volumes about the demand collapse we are facing around the world.
The crude oil price weakness has indeed been attributed to diminishing storage capacity that some energy experts estimated to be at "maybe less than one percent" worldwide. However, Art Cashin, who runs UBS's floor operations at the NYSE, has a different view, believing that the unprecedented dip into the negative territory for WTI's near-month pricing was due to "a serious amateur error by someone hoping for a short squeeze in the closing months, without realizing that the contract requires him to take formal delivery."
Others claimed that the so-called amateurs were "purely financial entities speculating in commodities" who were incapable of taking delivery of the oil (they didn't know they had to!) and thus forced to unwind at steep losses. Nonetheless, the lockdowns, production limitations, and travel restrictions in many parts of the world are the main culprits for less oil being used. A "too late, too little" production curtailment agreement completes the terrifying landscape for the oil market.
A rebound in the crude oil prices on Wednesday helped lift spirits and stock markets. However, a leaked World Health Organization report indicating the failure of Gilead's (GILD) remdesivir in its first randomized clinical trial refueled negative sentiment. With such a depressing backdrop, it was no wonder that the equity indices of Chinese companies (NYSEARCA:CQQQ)(NYSEARCA:FXI)(NASDAQ:MCHI) fell in tandem with their U.S. counterparts (SPY)(DIA)(QTEC) and closed lower for the week.
The Chinese Internet sector representative ETF, the KraneShares CSI China Internet ETF (NYSEARCA:KWEB), was
