Holiday in most of Europe, all eyes on the U.K, China, commodities, and inflation – Market Overview

Holiday in most of Europe, all eyes on the U.K, China, commodities, and inflation – Market Overview

Today’s trading session will be less eventful, as markets are closed in most of Europe. However, the U.K. is still open, so activity will not be completely underwater.

The uncertainty surrounding a potential inflationary outbreak in the United States still weighs in heavily on the markets.

Some investment banks such as JP Morgan have published studies predicting that growth and corporate profits could peak soon and that the Federal Reserve could change its discourse towards a more hawkish tone. However, the U.S.’ central bank could still maintain a very accommodative monetary policy for an extended period, as they have already stated.

If these forecasts are correct, we would be in a scenario in which the stock markets would lose the upward momentum they have garnered throughout the previous period and could even suffer downward corrections. At the same time, the fixed income market would continue to experience outflows with the consequent rises of bond yields. Finally, the U.S. Dollar would act as a haven currency, supported by the increase in interest rates and a weaker stock market.

In recent days we have witnessed corrections in the commodity markets. In this regard, China has spoken out against what they consider an excessive upward movement for commodities. The country has also issued a warning to commodity companies, announcing that they will monitor the market behavior and strengthen the commodity futures' supervision.

The Chinese authority also stated that it will not allow any violation of market rules and will severely punish monopolistic practices and excessive speculation. China is the world's leading buyer of raw materials, and such a warning could have severe consequences in the market.

COPPER, the main industrial metal that has a positive correlation with the price of the North American stock indices, has been on a downtrend for ten consecutive days, something that had not happened since the beginning of the pandemic crisis. Technically, this metal is close to a support level at 4.4270 below, which would make way for deeper corrections to the 4.34 and 4.00 zones.

In addition to being correlated with the North American indices, especially the S &P500, copper also has a positive correlation with the Australian dollar, the country's currency whose exports of raw materials go to China to a greater extent.

The AUD/USD pair has been experiencing flat behavior recently, with the previous bullish momentum lost. Technically it is moving around the 100-day SMA line but still far from its main support, around 0.7572.

Sources: investing.com, Bloomberg.

Informațiile prezentate în acest document sunt pregătite de Miguel A. Rodriguez și nu au intenția de a constitui consultanță pentru investiții. Informațiile din acest document sunt furnizate drept o comunicare generală de marketing cu scop informativ și, ca atare, nu au fost pregătite în conformitate cu cerințele legale concepute pentru a promova cercetările independente în domeniul investițiilor și nu sunt supuse niciunei interdicții de abordare înainte de diseminarea cercetărilor de investiții. Nu au în vedere obiective specifice de investiții, situații financiare sau nevoi specifice ale vreunui destinatar.

Utilizatorii/cititorii nu ar trebui să se bazeze exclusiv pe informațiile prezentate aici și ar trebui să facă propriile lor cercetări/analize, prin citirea cercetărilor de bază.

Key Way Investments Ltd nu influențează și nici nu are vreo contribuție la formularea informațiilor conținute de acest document. Conținutul acestui document este generic și nu ia în considerare circumstanțele personale ale fiecărui individ, experiența de investiții sau situația financiară actuală.

Prin urmare, Key Way Investments Ltd nu va accepta nicio responsabilitate pentru eventualele pierderi ale traderilor datorate utilizării sau conținutului informațiilor prezentate în acest document. Performanța din trecut nu este un indicator viabil pentru rezultate viitoare.