Freight prices jumped on Monday with front month Capesize futures up over 10% on anticipation of a large stimulus package out of China later this week. This created a knock-on effect into the smaller vessels with the Panamax front month futures up over 5%.
Oil futures performed well with a USD 3.00 move higher, as did iron ore which continues to push on the back of increasing COVID-19 cases in Brazil. However, China is not the only driving force, as equities, led by the U.S. were up + 2.5% after Moderna inc. said its vaccine tests yielded signs it can create an immune-system response.
With markets looking for good news, anything positive relating to a vaccine was always going to be welcome, stock markets have been pushing a recovery since late March, but commodity markets, excluding iron ore have been struggling to hold onto upside momentum days.
This begs a question, will commodities now start a run like equities if the Chinese government deliver a bold stimulus package as expected, or will iron ore come crashing down as fearful mills take a step back as they digest the vaccine news? It feels like the world is ready to go risk on across the board in preparation for the next phase of COVID-19
Markets might be down, the world might be entering a recession but the light shines in the darkness, and the darkness has not overcome it (John 1:5)
Ed Hutton