OIL
Brent oil prices dropped during early Monday trading, carrying the negative momentum initiated on Friday when the price of the barrel dropped around 2%. With inflation stubbornly hovering well above the Fed’s 2% target and the US economy showing a resilience few had predicted, the markets moved to price in a scenario where interest rates remain high for longer. Against this background, economic activity is expected to be impacted, leading to lower forecasts for future oil demand. This bearish demand outlook, both in China and the West, has more than offset the supply-side pressures arising from ongoing geopolitical turbulence in the Middle East and self-imposed output cuts by OPEC, keeping the price of the barrel well below the levels touched during the fourth quarter of last year.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European markets started the new week without clear direction, with most benchmarks holding their gains ahead of another slew of significant economic data.
The mixed market sentiment registered in Asia overnight extended to European assets and US future contracts, with uneven performances across all sectors.
There is not yet any real threat that could reverse the growing appetite for risk from investors, and today’s move seems to be primarily due to profit-taking moves following the newly established record level by the European benchmark.
However, investors will need further bullish catalysts before taking markets to new highs. With that said, all eyes will be on this week’s busy macro agenda as investors attempt to get more clues on the economic and monetary path Europe, China and the US will likely take in the short- to medium-term.
For now, the STOXX-50 still trades above its immediate support level at 4,855.0pts, as losses in the energy sector offset gains from basic materials and tech shares.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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