European stocks are expected to open lower thanks to retreating US equities.
US Stocks
US stocks gave up all-time highs as energy shares dragged indices lower. Energy stocks led declines, dragging the S&P 0.7% lower, its biggest lost since May. Meanwhile, the Dow Jones shed 0.3% off its value, while the Nasdaq lost 0.8%.
The drop in crude oil has conjured doubts that lagging inflation is simply transitory. The Federal Reserve raise rates last week, while the increase was expected, the surprise was just how hawkish the Federal Reserve were. Stocks rose to all-time highs after a range of geopolitical obstacles faded.
European Stocks
European equities are taking ques from the US, falling sharply this morning. The CAC 40 has given up 0.7% of its gains. Meanwhile, the DAX 30, the proxy of European sentiment, has declined 0.57%.
Not only weighed down by US bears, European stocks have another form of contention dragging them down – Brexit negotiations, which have added another layer of uncertainty to the region.
Commodities
Oil
Oil prices are near seven-month lows this morning.
Crude oil just can’t catch a break. The commodity has yet again declined to reach new lows. Doubts over the ability of OPEC to curtail supply amid the expanding US shale industry has turned investors bearish.
Momentum is dwindling off slightly and moving averages are flat, which could mean crude will trade in a tight trading range in the next few hours.
Crude oil inventories are due to be released later today. Expectations are at -1.2M.
Gold
Recently, gold has been dragged down by the Federal Reserve’s signals that another rate hike is coming this year. Last week, the precious metal retreated for the second-straight week as investors priced in another increase for the cost of borrowing.
Gold has recovered slightly this morning, up 0.3% as investors place bullish bets in the safe-haven asset amid the sell-off of equities.
Gold is looking very bullish this morning as momentum is revving upwards.
Forex
USD
The dollar rose 0.3%, after rising 0.4% on Monday. The greenback is recovering after it hit the lowest level since October last week.
EUR
The euro is down 0.2%.
With no strong European economic data coming out today, the euro/dollar could be driven by crude oil inventories.
JPY
The Japanese yen climbed 0.2% this morning, thanks to risk averse investors seeking shelter in this safe-haven asset.
Business-specific inflation is up by much more than anticipated – the All Industries Activity m/m, is up 2.1%, compared to the expected 1.7%, which has supported the Japanese yen.
USDJPY
Momentum is rising for this pair indicating bullish movements in the next few hours. Resistance level stands at 111.77
GBP
The pound has retreated 0.2% following a 0.9% on Tuesday. Brexit negotiations are weighing heavily on sterling. Additionally, Mark Carney, the Bank of England’s president, gave a dovish stance on interest rates amid rapidly expanding inflation in the UK.
GBPUSD
A downward sloping moving average curve suggests bearish movements in the coming hours.
