Choppy Trading Ahead?

Equity markets are largely moving lower on Tuesday, reversing some of Monday’s gains in choppy trade.

Earnings season will continue to dominate, and so far, there isn’t anything positive to take away from it. There are still a lot of huge names to report, of course, but so far, it underlines everything investors already think about the economy.

The environment is currently very challenging and uncertain, while the labor market is overly tight under the circumstances and likely to loosen considerably over the coming months. Investors are looking for any indication that this may be too pessimistic, but they aren’t getting what they want.

Moreover, the economic data we’ve seen this morning doesn’t inspire either. The European PMIs were a little better than expected and improved in many cases while still being pretty weak. On the other hand, the all-important UK services sector was weak and softer than expected, and even last month’s number was revised lower into contraction territory.

So, the euro area may avoid a recession while not growing significantly. The UK is almost certainly heading for one, even if it manages to have avoided it in the second half of last year. And that’s before we talk about interest rates again and whether market expectations are, in fact, too optimistic, which would make the situation worse. It doesn’t take much to shift the mood in the markets.

Is oil Starting to Run on Fumes?

Oil prices are marginally higher again, continuing the good run they’ve been on since early in the year, but momentum is starting the fade. The China reopening trade has boosted oil prices considerably, but we may need more data to justify continuing that.

Reports suggest that OPEC+ delegates expect the panel to recommend no changes to output when they meet next week, which indicates they believe the market is pretty balanced. Of course, there’s considerable uncertainty in the global outlook and the China transition, so that remains subject to change.

Gold Rising on Declining Momentum

Gold is edging higher again on slightly softer yields in the bond market. Of course, it is again doing so on weaker momentum, which suggests that, barring any bullish catalyst that would change that, it may be shaping up for a correction of some kind. It’s come off its early November lows at this point, and potentially plenty of resistance ahead. Of course, how much depends on the signals central banks and the economic data send over the coming weeks.

Choppiness Continues for Bitcoin

Bitcoin has been very choppy recently, trading essentially between $22,300 and $23,300. That’s a reasonably tight range, but importantly, it’s not given back any of the extraordinary gains it enjoyed over the last couple of weeks. That will continue to encourage the longer it remains the case, especially if it can once again break higher from here.