OIL
Oil prices continued to ease during early Monday trading, with the barrel of Brent costing a dollar less than it did at Friday’s market close. The easing in prices comes as fears of a conflict escalation in the Middle East recede. Supply-side worries drove the recent rally in crude prices, with many fearing that a protracted war, which could spill over across the Middle East, would lead to a reduction of supply in the global oil market. Recent diplomatic developments helped ease tensions, bringing some hope of a de-escalation in the war. However, the situation remains volatile, and oil prices will likely remain supported and dominated by upside risk.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equity markets started the new trading week on the back foot on Monday, sliding lower from Frankfurt to Madrid as global uncertainties linger.
Geopolitical concerns are still denting risk appetite this week as investors digest the prospect of a military conflict spreading to neighbouring nations in the Middle East, especially after Hezbollah organization in Lebanon started exchanging fire with Israel over the weekend. Meanwhile, China, who previously warned against the risks of a potential conflict escalation, also sent six warships to the region over the weekend, adding further pressure to market sentiment this morning.
Elsewhere, equity investors remain under the pressure of higher borrowing costs and rising treasury yields and are bracing for key economic data from the US alongside a monetary decision from the ECB later this week.
Market volatility will likely remain high until the end of October, as investors have to deal with many major market drivers simultaneously, which could lead to sharp price action in many asset classes.
Technically speaking, today’s drop on the STOXX-50 index led the market to hit a key long-term support level at 4,014.0pts (38.2% Fibonacci retracement of the market rally started last year) where a correction may take place, even if the trend remains mostly bearish for stocks so far.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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