India's Economy Starts to Slip, but Commodity Markets Booming

27 апр. 2021 г.

The start of the week was marked by India. In the sense that pandemic records in the country and a complete loss of control over the situation are increasingly materializing in the Indian economy. A number of indirect metrics (the volume of goods transported by rail, the number of residents leaving their homes, etc.), as well as direct ones (the unemployment rate), indicate that economic activity in India is beginning to experience serious problems.

Considering that India has been one of the main drivers of growth in the world economy in recent years, it is somewhat strange to see a record rise in prices in the commodity markets against the background of such news. Copper prices reached their highest level in 10 years. Soybean, wheat and corn prices all hit their highest levels in eight years. And the Bloomberg Commodity Index has reached its highest level in the past few years.

However, the oil market was far from being so optimistic. A sharp slowdown in the economy of the world's third oil importer is a serious cause for concern. Coupled with the increase in production from OPEC Plus, starting from May, the level of anxiety should only increase. In this light, our recommendation to sell oil at current prices remains relevant.

As for the situation on the US stock market, this week the official presentation of Biden's tax plans in all their glory is expected, which will be quite expensive for taxpayers. We have already noted that this is a very serious bearish signal for the stock market. For example, last week on the news of plans to double the tax on capital, the largest exchange-traded fund of shares of technology companies QQQ lost about $ 6 billion. On the other hand, these giants are reporting this week. If they do not repeat the Netflix failure (which is unlikely), the US stock market may well renew all-time highs.