Daily market commentary: Growing virus cases and new lockdowns in the APAC region are triggering anxiety amongst investors

OIL

Oil prices were slightly up during early Friday trading, but remain on track for the largest weekly loss since March, as a combination of factors weighs down on the cost of the barrel. On one hand, the markets are growing increasingly concerned over a big rise in virus cases in the Asia Pacific region, which have triggered new lockdowns and could diminish demand for oil. Meanwhile, the dispute between the UAE and Saudi Arabia appears to be moving towards a resolution, which could open the way for an increase in daily production from the OPEC+ members.

Ricardo Evangelista – Senior Analyst, ActivTrades 

EUROPEAN STOCKS

Most European benchmarks started the last trading day of the week on a positive note, with gains registered from Stockholm to Madrid amid strengthened market sentiment and ahead of major macro data. While inflation worries linger, the position of some central bankers who sees current stimulus policies as still necessary, is a source of optimism for investors, as it helps keep the environment significantly positive for stocks. Of course, the traditional lower summer liquidity will prevent prices registering strong directional moves in the short-term, but the probability of higher highs before the year-end remains alive so far. However, even if the bullish trading stance is likely to remain in the mid-term, investors consider current consolidations may be difficult to trade, especially as volatility spikes loom ahead of key data such as Friday’s EU inflation report and the US retail sales data due later.

Technically speaking, the FTSE-100 index registered another solid rebound over the 7,010 pts, as a pull-back following yesterday’s breakout of its bullish channel. The consolidation may continue further as the DMI indicator shows a rising bearish pressure with more directionality to come.

Pierre Veyret– Technical analyst, ActivTrades