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Market Overview

Oil Prices Notch Two-Year Highs as Dollar Gains Ahead of FOMC Speeches

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Oil prices climbed to more than two-year highs on Monday after major producers said output cuts were draining the supply glut. The oil market is having a stellar month, continuing a rally fueled by stronger demand and expectations of bigger output cuts.

Brent Tops $59.00 a Barrel

ICE Brent futures for November delivery reached a session high of $59.25 a barrel Monday. Prices settled on a gain of $2.16, or 3.8%, at $59.02 a barrel. That’s the highest settlement since July 2015.

U.S. West Texas Intermediate (WTI) futures notched five-month highs in New York. The November contract rose $1.57, or 3.1%, to $52.12 a barrel.

Crude prices have gained more than 10% over the past month on brighter demand prospects and expectations that global producers will extend an agreement to curb output.

U.S. Shale Boom

The resurgence of U.S. shale production has played a leading role in delaying the market rebalancing. Rising prices have encouraged shale producers to boost explorations plans and to pump more.

According to Baker Hughes Inc., the active U.S. rig count has jumped 85% from a year ago. The active rig count fell by one last week to a total of 935. Active oil rigs fell by five to 744.

Total active rig counts bottomed at 404 during the height of the oil-price collapse in 2016. Activity has gradually increased as efficient shale producers capitalized on steady price gains.

U.S. Dollar Gains Half a Percent

The U.S. dollar posted rare gains against a basket of rival currencies after New York Fed President William Dudley said interest rates are on track to rise gradually.

In a speech at Onondaga Community College, Dudley said said “inflation will rise and stabilize” around the Fed’s 2% target in the medium term.

Last week, the Federal Open Market Committee (FOMC) voted to keep rates on hold, but said another round of tightening was likely before year’s end.

The U.S. dollar index (DXY) climbed 0.5% to 92.65, its highest settlement in three weeks.

A stronger dollar normally acts as a disincentive to purchase commodity contracts that are themselves priced in the currency. However, that wasn’t the case for gold or energy commodities on Monday.

After a disastrous two-week stretch, December gold futures rebounded sharply on Monday to $1,314.40 a troy ounce.

Economic Data

An upbeat Texas manufacturing survey on Monday sets the bar high for this week’s U.S. data releases. On Tuesday, the Commerce Department will report on August new home sales. The Richmond Fed will also unveil the regional manufacturing index for September.

August durable goods orders will make headlines on Wednesday, giving way to revised second quarter GDP on Thursday.

The highly anticipated personal incomes and outlays report will be released Friday morning. The monthly data series includes the latest estimate of core PCE inflation, which is the Fed’s preferred measure of price growth.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 463 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Market Overview

Fed Tests Big Banks & Adds Support for Crypto

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Hi Everybody,

Every year since the financial crisis the Federal Reserve creates a simulated crisis to see which banks are healthy enough to survive in the event of an emergency.

The tests were particularly difficult this year because the economy is doing well, but it does seem that a few U.S. banks passed by the skin of their teeth.

Here we can see the results for some of the top banks.

It’s important to note that this simulation is not indicative of a real world situation. Next week the Fed will perform a few more tests that should give us a better understanding of the situation.

@MatiGreenspan
eToro, Senior Market Analyst

Today’s Highlights

  • Greek Debt Deal
  • Win for Mom & Pop
  • Fed Adds Ethereum

Please note: All data, figures & graphs are valid as of June 22nd. All trading carries risk. Only risk capital you can afford to lose.

Greek Debt Deal

The negotiations have been going on for far too long and have brought the markets to their knees several times already. Today the crisis has finally been declared over.

Though the Greeks didn’t get anything close to the deal that Prime Minister Alexis Tsipras advocated in his famous 2015 election campaign, they did win a number of concessions from the European Union that will make it easier to operate the country and start borrowing money from the public again.

Much of the €96 billion owed will be pushed back by 10 years, which should allow the country to breathe and grow the economy in the meantime.

The Euro is gaining a bit of ground this morning on the news (purple circle), although hasn’t quite recovered from Draghi’s announcement last Thursday.

Win for Mom & Pop

A landmark case has now passed the US Supreme Court that could have an impact on your portfolio going forward.

Until now, online stores in the United States were exempt from local sales taxes in states where they do not have a physical presence.

Bricks and mortar stores claim that they have been disadvantaged by this for the last 25 years. Some even say that this has been a major contributing factor to the retail apocalypse of the last decade.

Going forward, online retailers will be subject to the same taxes that everyone else is, which should level the playing field a bit, but won’t necessarily reverse the online shopping trend.

The clear winners here are the state governments because they’re about to get billions more in tax revenues. This may be a good time to look at the stocks you’re holding as bottom lines for both online and offline retailers will be affected by this.

Fed adds Crypto

While many old school financial institutions see cryptocurrencies as a threat, the Federal Reserve Bank of St. Louis is extremely supportive of them.

They have already released a significant amount of research detailing how the introduction of a new form of decentralized money can have a stabilizing effect on the global economy.

This week, the Federal Reserve Economic Data (FRED) website, run by the St. Louis Fed, has taken a massive step towards legitimizing cryptocurrencies in the eyes of the financial world by adding price tracking graphs for Bitcoin, Bitcoin Cash, and Ethereum, and Litecoin.

Here’s bitcoin on FRED…

…and Ethereum


Though the United States has been more skeptical about ICOs lately, they’re certainly looking a lot more friendly towards the more established cryptocurrencies.

What Else?

Remember that today is the much anticipated OPEC meeting. Watch for volatility in crude oil throughout the day.

Also, the Turkish elections will be held on Sunday. A month ago this looked to be a clear win for Erdogan the incumbent. Today, the scales have tipped just a little showing a slightly more favorable outlook for the opposition. Don’t get your hopes up too much though. Just keep an eye on the USDTRY.

Wishing you and yours an outstanding weekend ahead!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation.

The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro.

Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose.

Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Best regards,

Best regards,
Mati Greenspan
Senior Market Analyst

eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 103 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Italy Spooks markets Again as Stocks Remain Under Pressure

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European stocks Led the way lower today despite a bullish start in Asia, as equities gave back their gains when Daimler published a surprising profit warning, which was deeply affected by the recent trade war developments, reigniting fears of a tariff-driven downturn in global trade.

DAX, 4-Hour Chart Analysis

The Old Continent got into more trouble later on, when two anti-EU officials were named in Italy, resurrecting fears of a clash between the systematically crucial country and the core of the Eurozone. Italian yields rose in European trading, and although they are still shy of the levels hit during the May scare, the periphery could be in trouble as the ECB pledged to exit the market by the end of the year.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The main European indices were smashed lower during the session, with the DAX hitting a two month low, still being very weak relatively speaking compared to its US peers. US stocks sold off heavily following the opening bell and they failed to recover, unlike two days ago, and the major benchmarks traded well below yesterday’s levels just before the close.

The Nasdaq and the Russell 2000 lost some of their recent mojo, pulling back heavily of the all-time highs during the day. All in all, the risk off shift continues to dominate across the board, as we expected and we remain negative on risk assets here, especially regarding emerging markets, even as the Dollar’s rally could be over for a while.

Dollar Pulls back as Pound Surges

USD/CAD, 4-Hour Chart Analysis

The Dollar took a beating as the Philly Fed Index came in much worse than expected, and as the Bank of England sent hawkish signals, pushing the Pound and the Euro higher. The central bank left its benchmark rate unchanged at 0.5%, but a rate hike this year got much closer, with a key member of the bank voicing inflationary concerns.

The Greenback fell more than what the events would imply, so a larger scale consolidation could have already started in the currency following the recent gains and the marginal new high yesterday. With the EUR/USD pair nearing the 1.1450-1.15 support zone, the USD/CAD hitting 1.33 and the AUD/USD touching 0.7350, a meaningful counter-trend move would be timely in the surging reserve currency.

WTI Crude Oil, 4-Hour Chart Analysis

Gold continued to drift lower before the Dollar’s reversal and it hit $1262 for the first time since lat December before bouncing back above the $1270 level in late trading. Crude oil also fell sharply in early trading, and the WTI contract traded with a $64 handle before rallying back to $66 per barrel.

The OPEC meeting, which is expected to result in a supply increase by the cartel made the crucial commodity very volatile in recent days, but we expect the bearish trend to continue, with a likely dip to the $60 level in the coming weeks.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 280 rated postsTrader 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.




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Market Overview

Market Update: Dow’s Slide Hits Eight Days as Trade Risks Reemerge 

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U.S. stocks retreated Thursday, with the Dow Jones Industrial Average extending its losing skid to eight days as uncertainty over international trade undermined risk appetite.

Stocks Turn Defensive

Dow industrials were off 196.10 points, or 0.8%, by the close to settle at 24,461.70. That was the index’s worst settlement in three weeks.

The Dow’s losing skid is now the longest since March 2017. Another fall on Friday would bring the skid to nine days, the longest since 1978.

The broader S&P 500 Index fell 0.6% to close at 2,749.76. Seven of 11 primary sectors fell, led by energy and other commodity-sensitive sectors.

Meanwhile, the Nasdaq Composite Index closed down 0.9% at 7,712.95. The technology-heavy average closed in record territory on Wednesday.

Investor fear over a U.S.-China trade rift returned on Thursday, sending the VIX Volatility Index sharply higher. Wall Street’s gauge of investor anxiety climbed to a session high of 15.18 on a scale of 1-100 where 20 represents the historic average. The index would later settle at 14.68 for a gain of more than 14%.

Trade War Looms Large Over Market

U.S.-China trade tensions were back in focus Thursday after U.S. policymakers urged Google to end its business ties with Huawei, a leading Chinese smartphone maker. Congress recently banned U.S. firms from selling products to Chinese telecommunication giant ZTE, a move that practically shuts down the company.

Under President Trump’s orders, Washington announced last Friday it would implement a 25% tariff on up to $50 billion of Chinese goods, including semiconductors. Trump says additional tariffs of 10% will be applied on $200 billion of Chinese goods should Beijing choose to retaliate.

The first round of tariffs will come into force July 6.

In theory, tariffs will make American-made goods cheaper than imported ones, thereby encouraging consumers to purchase from local producers. Importers themselves will have to pay an additional tax on certain Chinese products they bring into the country – costs that are passed on to the consumer.

Saudi Arabia Proposes Crude Output Hike Ahead of OPEC Meeting

Saudi Arabia, OPEC’s de facto head, is encouraging fellow producers to support a deal that would see oil production rise by one million barrels per day. However, Iran remains the key holdout in the deal, with the country’s energy minister suggesting that a compromise is unlikely before the cartel meets Friday.

Despite Iran’s opposition, the biannual meeting in Vienna is expected to result in the first coordinated output hike since the cartel decided to constrain supplies all the way back in 2016.

The Saudis are banking on a slowdown in U.S. shale production over the next two years until pipeline bottlenecks are solved in the energy-rich Permian Basin, energy minister Khalid al-Falih said Thursday.

International crude prices declined sharply on Thursday, with Brent futures reaching a session low of $72.94 a barrel on London’s ICE Futures exchange. The global benchmark was last down $1.57, or 2.1%, at $73.17 a barrel.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 463 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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