WTI falling below $39
In the last few days the technical scenario for oil has deteriorated sharply with WTI falling below $39 to its lowest level since June. There is now a first support zone just above $37, while at $35 there is a stronger support. This decline could open space for an increase in volatility after a relatively quiet few months. Hopes for a quick economic recovery remain intact but growing cases of Covid remain a concerning factor. Anyway, this does not seem to be the main market mover with investors more worried by Saudi Arabia’s price cuts. Furthermore, expectations regarding China buying much less oil in the upcoming months are another disruptive element from a fundamental perspective.
Carlo Alberto De Casa – Chief analyst, ActivTrades
Tuesday’s early trading for European stocks was mixed as market sentiment remains uncertain. While energy shares have been weighed down by dropping oil prices in early trading amid fears of weaker short to mid-term demand, the worst performance comes from the tech sector. Tech companies continue to be sold-off today with concerns of a valuation “bubble” combined with profit taking moves following a strong summer driving market sentiment lower. However, other sectors seem to be more resilient and less volatile than tech shares, which shows market optimism is still alive. Having said that, most investors are likely to stay cautious on stock markets today as US-Sino tensions continue to simmer with President Trump said to be considering another ban on Chinese cotton.
Pierre Veyret– Technical analyst, ActivTrades
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