Abstract:Brent oil prices initially opened higher on Monday and have continued to rise as investors strategically position themselves following the recent violent attack carried out by Hamas in Israel over the weekend.
OIL
Brent oil prices initially opened higher on Monday and have continued to rise as investors strategically position themselves following the recent violent attack carried out by Hamas in Israel over the weekend.
The potential consequences of this event are uncertain and challenging to predict. Nevertheless, due to the surge in demand for safe-haven assets like gold and treasuries, there is a sense of unease that the conflict may persist and intensify. This market dynamic adversely impacts assets associated with risk, accentuating the impact of the unexpectedly robust US labor figures announced on Friday.
From the standpoint of oil traders, the foremost concern currently revolves around the escalation of the conflict if there is evidence linking Iran to the planning of the attack. such a scenario could result in a decline in crude oil supply and trigger broader disruptions in global oil trade should the conflict spill over into the Gulf region.
EUROPEAN SHARES
Stock markets drifted lower everywhere on Monday as investors sought safety following rising geopolitical uncertainty over the weekend.
Risk appetite took a hit at the beginning of the first trading session of the week on Monday after the military attack from Hamas towards Israel sparked fears of an escalation leading to a broader geopolitical conflict.
These developments have pressured market sentiment towards risky assets as investors readjusted their exposure from equities to havens such as gold, silver, oil, or JPY and CHF currencies.
Volatility may slightly decrease during todays session as most investors have now largely digested the news, although the trend is unlikely to change significantly without further major developments.
Traders will likely face a “technical” trading session today as the macro agenda remains significantly empty, and bond markets will be closed in the US on Monday.
The STOXX-50 index registered a “bull trap” after opening below its bearish trendline despite the break-out seen in the last exchanges on Friday.
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Wednesday's major data releases and macroeconomic events are expected to cause volatility to increase after another day of erratic trading in the financial markets. The Spring Budget for the UK will be released, and January Retail Sales figures for January will be made available by Eurostat. ADP Employment Change for February and January JOLTS Job Openings will be discussed later in the session on the US economic docket.
Major currency pairings are still trading in familiar ranges early on Tuesday after the erratic trading on Monday. The US economic docket for the American session will include the factory orders data for January and the ISM Services PMI survey for February. Final updates to the February PMI for the US, Germany, the UK, and the EU will also be released by S&P.