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Better numbers, crude rally

Better numbers, crude rally

Support for risk assets continued overnight as German trade data surprised on the upside and US continuing jobless claims unexpectedly fell. The US dollar eased, although bonds received solid support. Energy shares led stocks higher as crude oil traders responded to a shut in ahead of hurricane Delta.

Gulf of Mexico oil producers shuttered around 1.7 million barrels of production. This is close to 2% of global supply, and comes in the same week that inventory data suggests energy demand in the US is more robust than expected. The previously shunned SPX Energy sector jumped 3.8%, outstripping the 3.4% gains for West Texas and Brent crude.

Copper is facing a similar dynamic. Supply concerns around workers’ strikes in South America are meeting evidence of increasing Asian demand. Higher prices for these key industrial inputs is supporting the economic recovery narrative, despite the causal supply constraints and the potential for inflationary effects. US share markets in particular are showing an “all news is good news” effect. The phenomenon is as remarkable as it is unsustainable.

Asia Pacific markets indicate a more subdued response today to the international exuberance. Currency moves are muted, and share futures are mixed. GVains for bonds, gold and cryptocurrencies suggest at least some investors have concerns about elevated stock prices.