- The French services PMI data came better than expected
- Crude and Brent’s uptrend is strong
- European Central Bank’s meeting is due this week
OIL
President Trump brought a brand new surprise for investors when he unleashed the beast through his Twitter for energy traders. Oil is the commodity where you want to keep a close eye this week because we expect him to continue to send messages by using his favourite media and the markets would show its reaction. His message for the oil cartel (OPEC) was clear- it is artificially keeping the price higher for its benefit and he isn’t happy with it.
Technically speaking,the daily time frame shows that the uptrend is really strong when it comes to crude and Brent. A break of $70 for crude and 74.75 for Brent, would trigger another rally as traders would target the level of $80 which OPEC has talked about.
Equities
In the equity marketd, traders are going to look at the European markets very closely not only because the European Central Bank’s meeting is due this week but also for the reason there is an evidence that the bull rally is running out of fuel. Both; the DAX index and the EuroStoxx, didn’t impress investors with their performance last week while the FTSE 100 index closed week high mainly due to the weakness in the currency.
We are close enough to a famous month- May and the famous saying (which many investors do pay attention) does control some of the market sentiment; “Sell in May and Go Away”. When you look at the overall performance of the European markets, one can see that the indices are struggling to convince investors that there is still a lot of room left for the bull rally to continue its current trend. We think that we are very close to the consolidation period or the start of a market correction, and it doesn’t matter whether we are speaking of European or the US markets.
The reason is pretty simple; the economic activity over in Europe hasn’t shown us any clear evidence that we are going to see any major improvement in the economic data and the European Central Bank would have to normalise their monetary policy given the recovery in the eurozone. However, the recent eurozone’s ZEW number released supports the above argument as the data touched its lowest level in nearly five years.
In the light of this, investors would remain sensitive to the upcoming economic data due today, especially the ECB meeting. The French services PMI data came better than expected and traders are encouraged to take more risk on the back of this number. While the manufacturing numbers in Germany may support the argument that the economic engine of the Eurozone of the Eurozone isn’t out of steam.
