OIL
Brent oil prices opened higher on Monday and have since climbed further as investors seek to position themselves after the brutal Hamas attack in Israel over the weekend. The potential disruption from this event is difficult to predict. Still, judging by the increase in demand for haven assets, such as gold and treasuries, there is apprehension that the conflict could drag on and escalate. This dynamic penalises risk-related assets, compounding the effect of the stronger-than-expected US labour numbers released on Friday. From the perspective of oil traders, the main risk right now is the escalation of the conflict should Iran be found to have been involved in the preparation of the attack. Such a scenario could lead to a reduction in crude oil supply and a more general disruption in the global oil trade, should the conflict spill over to the Gulf.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Stock markets drifted lower everywhere on Monday as investors sought safety following rising geopolitical uncertainty over the weekend.
Risk appetite took a hit at the beginning of the first trading session of the week on Monday after the military attack from Hamas towards Israel sparked fears of an escalation leading to a broader geopolitical conflict.
These developments have pressured market sentiment towards risky assets as investors readjusted their exposure from equities to havens such as gold, silver, oil, or JPY and CHF currencies.
Volatility may slightly decrease during today’s session as most investors have now largely digested the news, although the trend is unlikely to change significantly without further major developments.
Traders will likely face a “technical” trading session today as the macro agenda remains significantly empty, and bond markets will be closed in the US on Monday.
The STOXX-50 index registered a “bull trap” after opening below its bearish trendline despite the break-out seen in the last exchanges on Friday.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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