OIL
Brent oil prices edged up in early Friday trading and look set to close the week in the black. Still, if confirmed, the gains will be small, driven mainly by the softening of the US dollar. The release of US inflation figures, showing a slowdown in consumer price rises, strengthened the case for the Federal Reserve to begin cutting rates in the near future, resulting in a dollar devaluation against other major currencies. Nevertheless, the biggest question mark for oil traders, and potentially the main price driver in the medium term, rests on demand forecasts. US inventories came up shorter than predicted, raising hopes of greater crude demand, but the upside created by this news was capped by uncertainty over the Chinese economy. Such doubts grew after the imposition of fresh US import tariffs on Chinese goods, feeding apprehension over demand from the world’s leading crude importer. Against this background, the price of Brent looks set to remain firmly supported above the $80 per barrel level and face resistance at $84.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European shares pulled back on Friday, following a drop in Asian stocks and US Futures sparked by stress signs in China and ahead of the EU inflation report.
Almost all EU sectors were in the red in early trading for the last session of the week, with tech and industrial shares as the worst performers. In addition to the prospect of further US tariffs on Chinese goods, poor home sales and consumption data in China provided investors with a valid reason to take some of this week’s profits out, leading benchmarks to pull back towards freshly established floors.
However, it is still too early to talk about a bearish reversal on riskier assets as this week’s upward momentum sparked by the prospect of lower inflation and a tighter employment market in the US should remain hard to offset. With that in mind, we see today’s early price action as a “technical” pull-back ahead of another slew of EU data and speeches from ECB officials rather than the start of something bigger.
The STOXX-50 currently trades inside its major support zone between 5,040pts and 5,055pts, which used to act as a short-term major resistance for the market.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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