LCG Research: Oil jumps as OPEC signals intention to maintain cuts.

 

Markets Mixed As Google Suspends Business with Huawei

Asian markets put in a mixed performance overnight as investors paused, waiting for new developments in the US – China trade dispute. This comes after a week of escalating tensions between the two powers. The latest headlines over the weekend indicate that Trump could be softening his stance slightly after he removed tariffs on Canadian steel and aluminium. However, US top tech companies starting to cut off vital Huawei supplies as they comply with the Trump administrations crackdown risks stoking tensions between the US and China further.

Another volatile week ahead?

Market volatility continues to stem from announcements and interpretations of what is going on in trade disputes between the US and its trading partners, but principally China. Whilst the latest headlines over Canada are supportive of sentiment, a news bite which increases risk aversion could be just around the corner. Investors know this and are on edge right now. That won’t change overnight. China are unlikely to take Google’s suspension of business with Huawei lying down.

A slew of US data across the week and the minutes from the Fed’s latest policy meeting will provide clues as to the robustness of the US economy. It is too soon to see any impact of the escalation of the trade war on data, which explains why investors are reacting so strongly to headlines. Strong data and risk-hitting headlines could ensure a volatile week for stocks and the dollar alike.

Australian stocks outperformed and the Aussie dollar popped higher after the centre-right Liberal National Party pulled off a shock election win in federal elections, beating the Australian Labour party. The results underpinned a firmer session across most of Asia, although stocks in China and Hong Kong fell.

Oil jumps 1.3%

Oil is rallying strongly in early trade on Monday after OPEC signalled its intentions to maintain production cuts for the rest for the year. Oil has already rallied around 40% since the start of the year, thanks mainly to OPEC limiting supply. Investors had been growing nervous that OPEC could look to remove the production limits at its next meeting in June, in light of tightening global supply and elevated prices. Whilst the OPEC production cuts have offered significant support to oil prices, US sanctions on Iran and Venezuela have also played a role. Add into the equation rising middle eastern tensions, as Iran retaliates to US measures and oil looks well supported at these levels.

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Jasper delivers regular commentary, seminars and webinars on market news, trading analysis, strategy and psychology. He is regularly interviewed by BBC News, Bloomberg, CNBC and Sky News, and has featured in The Times, Guardian and Daily Telegraph. Jasper hosts a weekly charting analysis webinar. He is qualified as a Chartered Market Technician (CMT) with the Market Technician Association, and has a degree in Finance and Economics.