OIL
Brent oil prices were almost 6% higher when the market opened this Monday, comparative to the close of Friday, with subsequent gains taking the cost of the barrel to the highest level in almost a month. With a move that caught the markets off guard, OPEC+ countries announced the intention to cut production by more than one million barrels per day. With the fizzling out of the banking crisis and the return of optimism to the markets, the price of the barrel was already showing signs of recovering, and the OPEC+ announcement compounded this dynamic, taking oil prices back to pre-banking-crisis levels. The question now being asked by oil traders is: will this mini-rally in the price of the barrel be sustainable? The reduction in offer is not guaranteed to support prices, because on the other side of the equation demand levels remain uncertain. Central banks remain focused on bringing down inflation, and higher interest rates could further downgrade the outlook for economic growth, and therefore dent oil demand.
Ricardo Evangelista – Senior Analyst, ActivTrades
EUROPEAN SHARES
Equity markets traded sideways on Monday, hovering around their annual highs, as investors digest the surprising decision from OPEC+ countries, at the beginning of a new quarter.
Most benchmarks slid shortly after the opening bell following an unexpected oil output cut announcement from OPEC countries, which sent black gold 5% higher. While higher oil prices normally tend to support stock markets, the news wasn't welcomed by equity traders here as it revives inflation concerns, which adds uncertainty to an already blurry mid-term context on monetary policy. This news may tempt some investors to look for safety, taking profits out of riskier assets, following solid performances registered at the end of the first quarter. However, traders are also eyeing a new batch of major macro data this week, which may prove market sentiment to be resilient as many investors already expect monetary conditions to improve this year.
The Stoxx-50 index still trades around 4330.0pts, a 2023 peak, with 4415.0pts as the next resistance level if prices manage to clear the current level.
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.