Oil Surges as Stocks Pull Back in Late Trading

It’s been a very busy session in global financial markets, with two distinct intraday trends dominating the major asset classes. The day started out on a clearly positive note, with the help of the US-Canadian trade deal that put an end on the post-NAFTA questions regarding the US-Mexican-Canadian trade relations.

USD/CAD, 4-Hour Chart Analysis

The deal could mean that the Trump-administration can go “all in” in the US-China tariff war, given that the POTUS has deals or advanced negotiations under his belts with most of the other major trade partners of the US. The Canadian Dollar surged higher thanks to the last-minute deal and the currency hit its highest level against the Greenback since late-May.

Tesla (TSLA), 4-Hour Chart Analysis

The tech segment was initially lifted by the SEC-Musk deal that included a $40 million fine for the controversial tweets by the CEO of Tesla about a “going private” transaction. Musk has to pay half of the fine himself, while Tesla will be responsible for the other half, and the CEO has to step down from the position of Chairman for three years.

While Musk might still face criminal charge because of the allegedly false “funding secured” claim, but the market definitely liked the deal and the company rose by more than 15% after last week’s ugly ending.

Nasdaq 100 Index Futures, 4-Hour Chart Analysis

The second half of the day was far from rosy on Wall Street, and the momentum of the tech sector broke the most, with the Nasdaq pulling back from the vicinity of its all-time high to close the day in the red.

The Dow and the S&P 500 finished with gains, but small-caps had an ugly session again, and despite the still strong uptrend in the major indices, the rally is seemingly getting narrower and narrower.

Dollar Rallies amid Italian Budget Skirmish

EUR/USD, 4-Hour Chart Analysis

While the Dollar traded slightly lower against most of the majors, during the day, it got progressively stronger. The EUR/USD pair closed near its intraday lows as the Euro got under selling pressure following reports that the EU wouldn’t accept the Italian budget proposal.

Italian bonds and stocks sold off sharply, with especially the financial segment being hurt by the move. For now, emerging markets remained stable and the limited contagion could point a continuation of the risk rally that dominated markets.

WTI Crude Oil Futures, 4-Hour Chart Analysis

While commodities had a mixed session, with gold and copper drifting sideways, crude oil (both the WTI and the Brent contracts) and natural gas jumped higher, lifting energy stocks across the globe.

The WTI contract hit the $75 per barrel level for the first time since 2014, and although short-term the commodity is overbought, the underlying trend is still positive thanks to the Iranian sanctions and the OPEC’s supply constraints.

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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.