By John Richardson
HOW long will the relief rally last in oil and equity markets following the Greek election results?
Sadly, the answer is not long, because difficult discussions lay ahead for the New Democracy party as it tries to form a government. Greece, also, remains broke and so the Euro crisis is far from being resolved.
The underlying fundamentals mean that nothing has essentially changed in oil, equity, and, of course, petrochemical markets following the election results. In petrochemicals, because of these underlying fundamentals, we expect aversion to risk to remain the dominant mood.
Meanwhile, petrochemical prices continue to decline. In Europe, for instance, polyethylene (PE) prices fell by €20-50 with Asian prices down by a further $20/tonne for the week ending 15 June, according to ICIS.
Monthly June PE prices in Euope are down by €150/tonne.
And even Jim O’Neill is now worried about emerging market growth.
Eleven years ago, the chairman of Goldman Sachs Asset Management said that the BRICs (Brazil, Russia, India and China) would drive the global economy, but last week he warned that his thesis faces “a more challenging test”.