Global hedge fund managers embarked on a significant selling spree of U.S. equities tied to commodities during the week concluding on October 6, as revealed in a client note from Goldman Sachs. This move came just prior to a sharp increase in oil prices, surging more than $3 per barrel on Monday.
The spike in oil prices followed the most substantial military incursion into Israel in decades, resulting in hundreds of casualties and multiple abductions.
Monday’s surge in crude oil prices marked a turnaround from the previous week’s downward trajectory, which saw Brent crude plummeting by approximately 11% and West Texas Intermediate (WTI) declining by over 8%. Investors had been preoccupied with concerns about rising interest rates and their potential repercussions on global demand.
The eruption of violence on Saturday posed a direct threat to U.S. attempts to mediate a reconciliation between Saudi Arabia and Israel, a potential agreement where the Kingdom would normalize relations with Israel in exchange for a defense pact between Washington and Riyadh. On Friday, Saudi officials had reportedly conveyed to the White House their willingness to raise oil output as part of the proposed deal, following months of supply constraints.
According to Goldman Sachs’ prime brokerage note, as of Friday, hedge funds had intensified their selling activities in shares of U.S. companies engaged in the production of chemicals, building materials, and paper products, marking the most rapid pace of selling since early June.
The week ending October 6 also witnessed U.S. energy stocks experiencing net sales for the second consecutive week, a trend that extended over the course of the preceding eight trading sessions, as stated by the bank.
On Monday, oil prices recorded an increase of over 3%, reaching $87.27 per barrel.
