OIL
Brent oil prices rose more than 3% over the last 24 hours as the markets reacted to an attack by British and American forces on Houthi targets in Yemen. The strikes came as a response to the militants’ attacks on transport ships crossing the Strait of Hormuz in the Red Sea, which they claim to be a legitimate form to pressurise Israel to halt operations in Gaza. This attack is another escalation in the tensions that have been simmering in the Middle East since the October 7 Hamas attack, and the markets are reacting with apprehension. The Red Sea route, which leads to the Suez Canal, is crossed by the main shipping lanes between Asia and the West and is the main export route for Gulf oil. With one of the most critical oil supply channels to the West under threat, it is not surprising to see crude prices rising in a dynamic that could create further upside for the price of the barrel should tensions continue to escalate in the Middle East.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
EU shares edged slightly higher on Friday, supported by positive macro data, despite lingering global uncertainties.
The STOXX-50 still trades inside its 80-point wide trading range between 4,420.0pts and 4,500.0pts. It could register a third impact over its upper bound thanks to today's bullish price action following reassuring macro data from China overnight and France this morning.
However, yesterday's US inflation data has unfortunately confirmed some doubts over the Fed's ability to proceed with a quick dovish switch, as the pressure brought by rising prices suggests Jerome Powell and his team still have some work to do. This doesn't come as good news for equity traders, as the prospect of a lingering hawkish stance could significantly dent the rally started in Q4 2023, sending benchmarks much lower in the short- to mid-term.
Elsewhere, rising tensions in the Middle East after the US took some retaliation measures in Yemen also contributed to today's bullish price action from energy shares, which registered one of the best performances so far.
Even if the US PPI data due later today is likely to bring its share of higher volatility, investors' focus will be drawn towards the earnings season's kick-off as they attempt to see how the current higher rates environment will impact corporate profits.
The Banking sector will be under the spotlight with reports due from Wells Fargo, JPMorgan Chase, Citigroup, BlackRock and Bank of America.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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