Equity rebounds alongside oil, OPEC+ meeting in spotlight

Asian markets are set for a rebound following a 3% rally in Wall Street overnight, as OPEC+ and Russia are moving closer to striking a 10 mil bpd cut today.

Meanwhile, investors are scrutinizing the virus situation in key hotspots namely the New York area, UK, Italy, Spain and Belgium, in which the infection numbers have crept up again.

S&P 500 index surged 3.4% overnight, led by real estate (+7.41%), energy (+6.74%), utilities (+5.41%) and materials (+5.0%). On the other hand, consumer staples (+1.41%), communications (+1.65%) and information technology (+2.74%) registered relatively smaller gains. This pattern suggests that investors are putting hope on the US re-opening some less severely-infected states soon. 

Technically, the S&P 500 has likely broken out above a key resistance at 2,646 points and is moving higher towards the next two resistances of 2,790 (50%) and then 2,932 (61.8%) respectively.

WTI crude oil price jumped over 7% overnight on OPEC+ hope, as Russia and Saudi Arabia seem to be moving closer to striking a 10-million bpd cut today. WTI is consolidating at around US$ 26 per barrel this morning, waiting for a confirmed deal to find its next direction.

Traders should be mindful of ‘buy on expectation, sell the fact’ in oil markets. The mid to long-term prospect of oil price is also decided by global demand outlook, with the US potentially re-opening some states and lifting the demand outlook

In Singapore, the Straits Times Index rebounds 1.3% to 2,570 points, with most sectors trending higher. This relief rebound is healing investor confidence and alleviates concern of a deep recession. But we are not out of the woods yet and fundamental elements do not support a sustained rally to the previous highs. We are likely to see a bumpy road ahead.

US SPX 500 - Cash