The correlation between S&P500 and WTI - caused by fear and uncertainty

We have not once mentioned the correlation between resources and stocks. Resources such as copper and oil. Specially today, oil has suffered a serious breakthrough in both varieties - the lighter European variety Brent and the harsh American West Texas Intermediate. The decline in oil starts to outpacing the stock, giving an extra bearish picture of the situation, which seems to be worsening as tensions between the US and China increase. Tension that excites investors. Panic certainly does not, but certainly markets are beginning to worry about the evolution of the events between the two super powers

To gain the truth of the oil downturn, volatility today rose significantly in oil futures, with the indicator last making such a big spike at the end of 2018. Obviously, the fear of risk-off in the stock begins to shed light on the light and raw materials. The fear of a lack of oil demand, a slowdown in the economy and the geopolitical situation in the Middle East. The potential explosion of the trade war will only lead to an increase in volatility, leading to a prolonged sale of shares and the energy sector.

Graphs: Used with permission of Bloomberg Finance L.P.

Read more:

• Oil fundamental and inertia can push prices to new highs
• Goldman Sachs: “Gold is a better hedge than oil in current market conditions”
• Golden years for Gold
• The end-of-year gold rally continues at full speed
• Gold goes over $ 1,500, big players with estimates for the next year