OIL
Brent oil prices dipped during early Thursday trading, primarily driven by fears over future demand. The US economy remains resilient, with inflation continuing to be a concern. Against this backdrop, the Federal Reserve has room to maintain higher rates for longer, a dynamic that bodes poorly for oil demand forecasts and puts downward pressure on prices. Another consequence of this situation is a general fall in risk appetite in the financial markets, which also weighs negatively on the price of oil.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
The sell-off continued towards EU shares on Thursday, extending Asian losses, as fear trading dominates ahead of key CPI data on Friday. The risk-off trading stance prevails as market sentiment continues to be weighed down by the prospect of delayed monetary easing in the US and Europe. This situation can also be seen across other asset classes, such as bonds, as spiking treasury yields tend to suggest investors are taking some cash out of the market.
These portfolio readjustments occur as more and more investors anticipate firmer CPI data in the Eurozone and the US, which would support the “higher for longer” narrative from central banks. The STOXX-50 index has registered mixed sectorial performances since the opening bell, with gains from healthcare and basic material shares offset by losses in the tech and energy sectors.
The pan-European index has broken out of a key short-term support level, now trading below the 5,000pts mark as traders struggle to find bullish catalysts. There is a possibility that investors are overreacting ahead of time, with the current price action primarily fueled by hawkish wording from Fed officials so far. Tomorrow’s data will likely shape the mid-term outlook for stocks and other assets and provide more clues on the path monetary policies will take.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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