Oils resurgence uplifts global stocks

7 October, 2016

Stock markets were resilient on Thursday with most major arenas maintaining gains following oil’s resurgence which bolstered investor risk sentiment. Asian markets warmly welcomed oil’s rally with Japan’s Nikkei concluding +0.47% higher as risk-on punished the Yen. In Europe, equities were supported by Asia’s bullish momentum while Sterling’s vulnerability attempted to keep the FTSE100 buoyed. Wall Street received a welcome boost from Wednesday’s positive services data that uplifted sentiment towards the US economy and could trade higher on Thursday if the positivity rolls over. Global stocks may be open to further gains in the short term if the combination of rising oil prices and improving sentiment towards the US economy attracts investors to riskier assets.

FTSE100 spotlight

The FTSE100 lurched to near all-time highs above 7000 points this month and this has nothing to do with an improving risk appetite but Sterling weakness from the persistent Brexit anxieties. Sterling’s vulnerability has boosted the income of FTSE100 companies who work abroad consequently driving their share prices higher as increased profits encourage a revaluation of their stocks. While the short term gains displayed in the FTSE100 have been undeniably impressive, it should be kept in mind that the ingredients for a bear market continue to linger in the background. Renewed Brexit anxieties have left investors on edge while lingering concerns over the future of the UK economy after the article 50 is invoked continues to weigh on sentiment. The FTSE100 may be in a period of extreme sensitivity and it could take an unexpected catalyst to trigger a heavy selloff.

ECB taper talks rattle Euro

Euro/Dollar was placed on a chaotic roller coaster ride this week following the ECB tapering rumours which provided a temporary foundation for bulls to install rounds of buying. The taper talks were swiftly discounted after investors reassessed the current health of the Eurozone which was nothing to be excited about. It should be kept in mind that inflation remains stagnant while growth subdued consequently failing to meet the conditions to taper. Although there is a growing weariness of the effectiveness of monetary policy to revive growth, it seems likely that the ECB continues its QE program until March 2017 before reviewing for further extensions.

From a technical standpoint, the EURUSD is struggling to keep above the 1.1200 support. A strong breakdown and daily close below this level could encourage a further decline lower towards 1.1100.

Dollar bulls take action

Dollar bulls received ample encouragement on Wednesday following the upbeat U.S services sector data which revived hopes over the Federal Reserve raising US interest rates in December. The greenback has been solid this month with the repeatedly beating domestic data solidifying expectations towards the Fed breaking its trend of central bank caution this year. Investors may direct their attention towards Thursday’s unemployment claims report which could add to the attributes needed for a rate rise if unemployment claims subside.

From a technical standpoint, the Dollar Index is bullish on the daily timeframe as prices are trading above the daily 20 SMA while the MACD has crossed to the upside. Previous resistance around 96.00 could transform into a dynamic support which opens a path higher towards 96.50.

Commodity spotlight – Gold

Gold remains under immense pressure as the toxic combination of Dollar strength and renewed US rate hike hopes entice bears to install repeated rounds of selling. The metal currently trades around three-month lows at $1262 and could trade lower this week if Friday’s NFP exceeds expectations. Although the bursts of risk aversion amid concerns over the global economy have somewhat protected the metal in the past, this new period of renewed optimism over the Fed pulling the trigger in December could ensure Gold remains depressed. From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support around $1285 could transform into a dynamic resistance which opens a path lower towards $1250.


Source link  
Global equities hit by bearish pressure

Global markets took a sharp U-turn as the markets were in turmoil on the back of large crypto currency sell offs caused by regulation fears and a crackdown...

Dollar stabilizes after four days slide

The greenback’s sell-off paused early Tuesday after touching its weakest level since January 2015. Traders have been selling the buck across the board...

US equities hit another record high

The US markets have continued their hectic pace this year as the S&P 500 reached new highs on the back of economic figures. These figures showed...


Fixed income markets to dominate FX

The outstanding performance for equities which sent many major indices to record highs may have just paused. Asian stocks were trading broadly lower...

How longer the tired bull will keep running?

Led by Wall Street, global equity markets continued to enjoy one of their best starts in eight years. The Japan’s Nikkei 225 marched to a new 26-year high...

Critical week for dollar after a fragile start

After having the worst annual performance since 2003, the dollar continued to struggle in the first trading week of 2018. The dollar index fell to...


Robust economic growth

Equity investors across the globe are finding no reasons to take profits after an excellent performance in 2017. Asian stocks are trading at record highs after...

FOMC minutes - Will dollar bulls attack?

Investors kicked off 2018 on a positive note sending U.S. stocks to fresh highs on the first trading day. The optimistic approach on day one was...

Equities reaction on tax breakthrough

Asian markets woke up on Thursday to the news that Republicans had passed the long-awaited tax bill. President Trump is now just a pen...

  


Share: