Daily Analysis: Global Rally Stalls as Oil Falls on Qatar Tensions

Monday Market Recap

Asset Current Value Daily Change
S&P 500 2433 0.17%
DAX 12834 Closed
WTI Crude Oil 47.17 -2.42%
GOLD 1284.00 0.45%
Bitcoin 2532 3.23%
EUR/USD 1.1248 -0.27%

Global stocks are somewhat lower today, as several markets are closed in Europe, and trading volumes are slim. The terror attack in London and Saudi Arabia’s diplomatic move against Qatar are making headlines. As the tensions mount between the region’s two strongest powers, Saudi Arabia and Iran, this move opens a new battleground. Other Gulf countries followed Saudi Arabia, with Bahrain, UAE, and Egypt also cutting ties with Qatar. Oil is falling once again today, following an initial spike on the news, as the political problems in the Middle-East could jeopardize the OPEC’s production cut agreement.

WTI Crude Oil Futures 4-Hour Chart Analysis

European stocks are weaker than their international peers, with the US indices trading just barely off last week’s all-time highs. Economic numbers were disappointing again, with the British Services PMI missing expectations by a mile, and the US ISM PMI and Factory Orders also coming in below the consensus estimates. Safe-haven assets are benefiting from the risk-off sentiment, with gold climbing to another 5-week high, while the Dollar and the Yen are gaining ground on the other majors.

The Great British Pound is up today following the London attack, despite the negative economic news, as the Conservative Party’s odds of winning the elections on Thursday have increased. The models are still predicting a Tory victory, and the recent momentum of the Labour Party will most likely be insufficient to win the referendum.

British Opinion Poll Trends, June 5th

The “China-problem” is still not fixed, with the Shanghai composite still trading close to its previous lows, and industrial commodities still being under pressure. The Chinese financial system is one of the biggest long-term risks to the global economy, and the Yuan’s expected weakness could cause another wave of buying in traditional safe-haven assets and cryptocurrencies alike.

Technical Picture

The Shanghai Composite staged a rebound off the 3000 level after dropping 10% on the country’s resurfacing debt problems. The counter-trend move formed an ABC correction that might have topped last week, increasing the chance of a re-test of the crucial 3000 support, with likely new lows down the road. The MACD indicator is back to neutral now as the oversold readings have been cleared by the rebound. The 3085 support could be in focus in the next days, while a move above the 3150 level would indicate that the index is headed back to 3300.

Shanghai Composite, 4-Hour Chart Analysis

Key Economic Releases on Monday

Time, CET Country Release Actual Expected Previous
10:30 UK Services PMI 53.8 55.1 55.8
16:00 US ISM Non-Manufacturing PMI 56.9 57.1 57.5
16:00 US Factory Orders -0.2% 0.0% 0.2%


Key Economic Releases on Tuesday

Time, CET Country Release Expected Previous
6:30 AUSTRALIA RBA Rate Decision 1.50% 1.50%
6:30 AUSTRALIA RBA Statement
16:00 CANADA Ivey PMI 62 62.4

Featured image from Pixabay

Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.