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Markets Commentary


If yesterday’s selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.

Asian session, it was once again up to the “magical” USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another “magical” intervention session by the BOJ.

In addition to rising European stocks and S&P500 futures which were 0.6% higher at last check, oil prices also rose after the International Energy Agency softened its forecast for a global supply surplus.

Iran output rose to pre-sanctions levels in April while Iraq output rebounded on near-record southern exports, it offset this surge in output with hopes that non-OPEC supply would decline by 100k bpd citing outages. Which is ironic because with every $1 higher in WTI more shale companies restart production. It also expects a smaller global surplus on stronger global demand.

A good summary of recent oil price action comes from Angus Nicholson, analyst at IG, who said that “we have had a lot of reasons that have supported the price over the past week, the Canadian wildfires, Nigerian supply disruptions and then a surprisingly bigger inventory pullback. At the moment, oil has been trading very tightly within a range of around $43 to $47. We need a key breakout of that trading range to decisively say which direction the price is going.”

CRude OIl WTI Trend

Market Snapshot now

  • S&P 500 futures up 0.6% to 2069
  • Stoxx 600 up 0.2% to 335.4
  • Eurostoxx 50 +0.4%
  • FTSE 100 -0.1%
  • CAC 40 +0.4%
  • DAX +0.3%
  • IBEX +0.6%
  • FTSEMIB +0.4%
  • SMI -0.2%
  • Nikkei 225 up 0.4%
  • Hang Seng down 0.7%
  • Kospi down 0.1%
  • Shanghai Composite down 0%
  • ASX down 0.2%
  • Sensex up 0.7%
  • Euro down 0.12% to $1.1412
  • Dollar Index up 0.13% to 93.95
  • Japanese yen down 0.52% to 108.98
  • Brent Futures up 0.6% to $47.9/bbl
  • Gold spot down 0.6% to $1269.4/oz
  • German 10Yr yield up 1bps to 0.14%

Global Top Headlines

  • Donald Trump Is Considering Newt Gingrich for Vice Presidential Role: according to multiple people familiar
  • Brexit Dominates Agenda as Bank of England Unveils New Forecasts: economists predict officials will leave key rate at 0.5%
  • French Government Faces Confidence Vote After Labor-Law Revolt: rogue Socialist lawmakers blocked government labor bill
  • Norway Keeps Rate at Record Low as Oil Wealth Spending Jumps: Norges Bank says rise in oil price may mean higher growth
  • ECB Can Still Pull Rabbits Out of the Hat, Council Member Says: Lithuanian central bank governor speaks in Bloomberg interview
  • Boeing Mulls Price Cuts, to a Point, in Quest for 737 Share Gain: planemaker bid used jets against C Series in Delta contest
  • Lockheed Martin Stands to Get $3 Billion Order From Denmark

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