Global stocks unmoved by oil price revival

Global stocks displayed weakness during trading on Tuesday with most major arenas descending deeper into the red territory despite the resurgence in oil prices that previously boosted global sentiment. It is becoming increasingly clear that oil market rallies have lost their grip on global stocks with investors directing their attention towards the state of the global economy as a means of triggering risk appetite.

This was reflected in the European markets which were left depressed over the concerns of faltering growth in the Eurozone economy, while Wall Street followed the same negative pattern as diminishing rate hike expectations left investors anxious. Although Asian equity markets continue to display resilience amid the growing speculations that the Bank of Japan may intervene, most Asian stocks could be poised to decline when risk aversion reclaims center stage.

Sterling under pressure

The Sterling exhibited explosive levels of volatility across the board during trading on Tuesday following the combination of Brexit woes and tepid UK inflation data which reinforced the bearish sentiment towards the currency. With the E.U referendum vote looming, financial heavyweights such as the International Monetary Fund (IMF), Bank of England (BoE), and UK Treasury have firmly voiced their concerns over the impacts of a Brexit to the UK, which has consequently intensified Sterling volatility. With uncertainty mounting as the Brexit debate escalates and domestic data missing expectations, investor attraction continues to be haunted towards the Sterling with prices vulnerable to further losses. Market participants may direct their attention towards Wednesday’s UK employment report and if this follows the same negative path as the CPI, then bears could be offered an opportunity to attack the Pound lower.

FOMC minutes preview

Investors may divert their attention towards the anticipated FOMC meeting minutes on Wednesday which could offer some clarity on interest rate rise timings in 2016. While it is likely that the FOMC minutes could be a non-event, investors may be pressured to heavily peruse the statement for potential clues on the possibility of the Fed taking action in July. Although in the recent weeks, data from the States has displayed signs of recovery, it seems clear that the unstable global economic landscape still acts as a barrier that could sabotage the Feds efforts to raising rates. Sentiment remains somewhat bearish towards the Dollar and Dollar weakness could continue to be the theme in the global currency markets if May’s NFP fails to show signs of a recovery.

WTI Crude springs to 6 months high

WTI Crude lurched to fresh 6 month highs at $47 during trading on Tuesday as expectations grew over a potential drop in supply amid the obstruction in production from major oil exporting nations such as Nigeria, Canada, and Venezuela. While bulls may be commended for exploiting this opportunity to sending oil prices higher, with overall global oil production still near record highs this commodity remains fundamentally bearish. The oversupply woes may act as a barrier which prevents prices from trading higher while fading expectations over OPEC agreeing on a production freeze should encourage bears to attack. Although prices are currently pressing forcefully against $47, any signs of weakness could provide an opportunity for bears to send the commodity back towards $44. If the crude oil inventories report on Wednesday’s signals a rise in stockpiles then bears could utilize this catalyst to send prices lower.

Gold bulls challenge $1285

Gold prices rebounded from the daily 20 SMA during trading on Tuesday as the growing concerns over the health of the global economy provided a foundation for bullish investors to send the price higher. This yellow metal continues to fight against the resurgence in Dollar strength and could be poised to break above $1285 if the FOMC meeting minutes have a dovish touch. Expectations have already diminished over the Fed taking action in Q2 and when Dollar weakness reclaims center stage, bulls could be offered an opportunity to install another heavy round of buying. From a technical standpoint, prices are trading above the daily 20 SMA while the MACD trades to the upside. If the daily 20 SMA defends, then Gold could rise towards $1285 and potentially higher.

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