Crude oil - breaking out at last?
Asian Pacific stock indices were mixed overnight, with outsized losses across Chinese indices. This followed the release of another disappointing Manufacturing PMI, even though the Services sector continues to show expansion at a better-than-expected rate. It was a similar situation across Europe which had to deal with a dismal set of Manufacturing PMIs. But it’s a cheerier picture for US stock index futures which are noticeably stronger in early trade. Tech stocks are firmer and bond yields are a tad softer, although the 10-year Treasury yield remains above 4.50%. Investors appear to be taking advantage of last month’s pullback across the ‘Magnificent Seven’ to buy in at (slightly) cheaper levels. The question for the next few weeks seems to be whether the recent pickup in bond yields is due to concerns of future inflationary pressures, fanned by Trump’s tariff threats, or for the more benign expectation of stronger economic growth ahead.
The US Dollar Index is at a fresh 25-month high, trading around 108.50, and precious metals are managing to rally. But it is the energy sector that may now be poised for a trend change. Front-month WTI is trading within cents of levels last seen in mid-October. Prices have made steady upside progress over the past month and it looks as if crude could be about to break out of its long term downtrend. It’s too early sound the all-clear. Much will depend on the size and shape of the next pullback. But the daily MACD has crossed above the ‘neutral’ line suggesting that momentum is now to the upside.
The US Dollar Index is at a fresh 25-month high, trading around 108.50, and precious metals are managing to rally. But it is the energy sector that may now be poised for a trend change. Front-month WTI is trading within cents of levels last seen in mid-October. Prices have made steady upside progress over the past month and it looks as if crude could be about to break out of its long term downtrend. It’s too early sound the all-clear. Much will depend on the size and shape of the next pullback. But the daily MACD has crossed above the ‘neutral’ line suggesting that momentum is now to the upside.
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