Investors are getting conflicting signals when it comes to the future direction of oil prices, and this week’s fall to three-month lows off the back of crude producers’ cartel OPEC+’s decision to boost output is unlikely to be the end of the story.

The introduction of tariffs on neighbouring countries by the Trump administration could stoke inflation, which would typically be reflected in higher energy prices, but if economic growth is weaker it could lead to reduced hydrocarbon demand.

While developments in Ukraine remain unpredictable, some sort of peace deal might see Russian oil and gas return to global markets, helping tip the supply and demand scales, although escalating Russo-European tensions might well have the reverse effect.  

This inherent volatility and unpredictability is part of the reason we share the market’s scepticism over the turnaround plan unveiled by BP (BP.).

In perhaps the most extreme example of just how far and how fast the oil market can swing, the US crude benchmark WTI actually fell below $0 in April 2020 when the pandemic struck.

This week’s big feature takes the five-year anniversary of the Covid sell-off as an opportunity to highlight the stocks trading materially below their pre-pandemic levels. 

Although there wasn’t space to include them, as we largely focused on the larger names, many small-cap oil and gas stocks still bear significant scars from this period despite crude prices actually being higher today than they were in              February 2020.

European stocks are enjoying a moment in the sun as US markets teeter. After a long period of underperformance relative to their American counterparts, Germany’s DAX, up 13.7% year-to-date, France’s CAC-40, up 9.7%, and the FTSE 100, up 8.1%, are comfortably outstripping the 0.5% fall in the S&P 500 and 5% slump in the Nasdaq Composite so far in 2025.    

As we discuss in our news section, the European defence sector has been particularly in demand in recent weeks.

Yet, as Bank of America points out, European equities ‘have seemingly gone from strength to strength, with the Euro Stoxx 50 making new highs and outperforming the S&P 500 by the most since the quantitative easing era. However, risks this momentum runs out of steam motivates cost-effective hedges.

‘The rally was powered by underweight positioning, but that effect may fade. The strength in defence stocks has also supported regional equities, but the subsector isn’t large enough to push broader equities higher, unaided.’

Interest rate cuts from the European Central Bank may be a further catalyst for Europe’s stock markets as weaker inflation leads Morgan Stanley, among other market observers, to predict an additional cut in April.

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