For those of you who have been watching the stock markets recently there is no doubt that it has been safer to play in the rangebound and somewhat dull commodity markets. Powerisk has referred back to the stock markets in the past and the question is why are they related.

As banks and pension funds have £bn wiped off their market values they tend to run to the hills this means liquidating their assets and putting the money back into asset clasess which are less exposed. However, the area which has caused problems for the stock market is credit problems. Many of the banks have had to shore up credit for their existing funds and central banks have also been involved. This tends to make all markets jittery and so we have seen oil markets for example continue to fall as traders take cash and close positions.

Expect the fall out to continue for sometime before some normality in the stock market is seen. Also do not be surprised if we see commodities fall on the back of hedge funds close positions in emissions and oil.