Market Analysis

Brent prices drop following US President’s comments on escalating fuel costs

OIL

Brent oil prices dropped below the $109 mark for the first time in a month, shedding six dollars during early Wednesday trading. The drop in prices came as the markets reacted to headlines reporting on President Biden’s willingness to intervene, in order to halt escalating fuel costs that are exacerbating the ongoing cost of living crises triggered by inflation. This is an example of the markets reacting negatively to uncertainty generated by political intervention; despite the underlying conditions, with demand outstripping supply, prices still dropped as investors react to the Biden administration’s push for lower fuel costs.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

GOLD

Gold prices have, over the last few weeks, remained within a relatively narrow range, conditioned by growing fears over inflation, which create upside, and the strengthening of the US dollar caping this upside. This morning, gold prices are hedging down due to the strengthening of the greenback, ahead of Jerome Powell’s testimony to the US senate later in the day. Should Powell adopt a pronounced tilt towards hawkishness, clearing the way for another 75bp rate hike in July, such action would be likely to trigger further dollar strength and rises in treasury yields, resulting in downside for gold. Otherwise – and this is the most likely scenario – should the Chairman of the Fed avoid such bouts of hawkishness, gold prices are likely to remain relatively stable, with support lines around $1,820 and $1,810.

Ricardo Evangelista – Senior Analyst, ActivTrades

Source: ActivTrader

 

EUROPEAN SHARES 
European benchmarks slid on Wednesday alongside US Futures, extending the trend started overnight in Asia, as uncertainties linger.

The “risk-off” trading stance prevails today as the slide in stock prices echoed the rise of safer havens such as Treasuries and the JPY and USD currencies. Investors chose to take some profit on riskier assets following yesterday’s rebound, as both the short- and long-term economic outlook remain blurry so far. Market operators fear the Federal Reserve may be moving too quickly with its new hawkish stance, increasing the chances of a “hard landing” as a recession looms. In addition, one of the most important topics for many is related to the situation of the debt markets. Most investors are still waiting to see how the ECB and the Fed will manage to stabilize those markets without increasing inflation, and this is likely to become increasingly crucial as we go deeper into the summer period. Meanwhile, some answers may be brought today as Jerome Powell braces for his testimony before the US Senate later in the afternoon.

The DAX-30 index brings one of the worst European performances so far, led down by materials and Tech shares. The market is now trading close to the 13,000.0pts level, the last support area before the 12,555/12,430 zone.

Pierre Veyret– Technical analyst, ActivTrades

Source: ActivTrader

 

The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.

All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.

Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.