OIL
Brent oil prices edged up during early Friday trading, hovering just below the significant resistance level of $84 per barrel. These gains are attributed to increased optimism in the markets, spurred by Wednesday's testimony to the US Congress by the Chairman of the Federal Reserve, Jerome Powell. His acknowledgement of an impending interest rate cut by the central bank softened the US dollar, bolstered risk appetite in financial markets, and instilled optimism regarding the global economy's growth prospects, thus elevating oil demand forecasts. Furthermore, support for the price of the barrel comes from data published by the EIA in the US, indicating an uptick in demand evidenced by the decline in gasoline inventories. Concurrently, China has seen oil imports rise by over 5% so far this year. Given this backdrop, the upward trajectory of the barrel's price comes as no surprise, with potential for further gains on the horizon.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
European equities jumped alongside US Futures contracts on Friday as investors cheered on long-awaited dovish hints from central banks from both regions.
Stock investors felt a wave of relief yesterday after Christine Lagarde surprisingly provided more dovish hints during the ECB's press conference following its latest decision on rates. The central banker finally gave investors more visibility about monetary easing, saying the ECB could proceed with rate cuts not later than June. This stance has also been echoed in the US, where Fed chairman Jerome Powell indicated the FOMC was "not far" from cutting rates.
The two statements are a major bullish catalyst for riskier assets, explaining the sharp price action seen on most European and US indices.
The STOXX-50 finally cleared the upper bound of its narrow range and reached another significant resistance just below the 5,000.0pts mark, led higher by most sectors, with energy shares as the top movers.
However, even if sentiment has clearly strengthened, the market may register a very short-term corrective move to test the newly established support around 4,925.0pts. This move could even happen today, as more volatility may come to the markets in the afternoon with major US data such as the Non-Farm Payroll, the average hourly earnings, and the unemployment rate.
Pierre Veyret – Technical analyst, ActivTrades
Source: ActivTrader
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