Investors
were primarily relaxed while witnessing the military mutiny in Russia over the
weekend. Even if it did last longer than it did, investors’ reaction would have
been rather muted on this evens as Russia’s financial market is mostly
isolated.
The fugacity of the
mutiny story had limited impact on markets in Russia too, even though the Russian
Rouble and stocks were under pressure on Monday. However, this could also be attributed
to the deteriorating prices of risky assets after the hawkish rhetoric of the
major central bank officials ahead of the summit in Portuguese city Sintra on
June 26-28. Weak economic data on China also contributed to declining stock
indexes.
Weak spending data, house and car sales in China
in June that were lower from before the pandemic signal a slower-than-expected
recovery in China, and the rest of the developed countries. This may hardly add
optimism, especially after leading central banks confirmed their hawkish
monetary stance.
U.S.
Treasuries yields are declining flagging falling chances for another interest
rate hike in America despite hawkish rhetoric by the Federal Reserve (Fed), the
European Central Bank (ECB) and the Bank of England (BoE). If stock indexes
continue to climb it may provide opportunities for monetary policymakers to
continue with raising interest rates.
Further
statements by the heads of the Fed, ECB, BoE, and Bank of Japan (BOJ) that will
attend the central bankers’ summit in Sintra, may give forward guidance to
investors this week. ECB’s President Christine Lagarde will be the first to
start on Tuesday, while the panel discussion session on Wednesday could be the
most interesting event of the summit.
Macroeconomic data that
is going to be released this week is expected to confirm a cooling of the
global economy. May personal spending data and the core Personal Consumption
Expenditures (PCE) index in the United States, inflation in the Eurozone, and
business activity data in China are worth following in the second half of this
week.
Technically,
the S&P 500 index continues to have an upside formation with targets at
4250-4350 points, that have already been met. The market has failed to move
alongside an extreme upside scenario with targets at 4550-4650 points during
last week, and is moving downside along with the correction pattern. The index
is trying to pass the support at 4340-4360 points. Unsuccessful so far. The
next support level is at 4240-4260 points. If it is broken through a scenario
with the 4000-4100 points target, will be initiated.
Crude
prices continue to test the support at $67-69 per barrel of the Brent crude
benchmark. Once this level is broken, recession scenario chances will become
very high. Its targets are at $40-60 per barrel of Brent crude. Traders should
not forget the Organisation of Petroleum Exporting Countries and its allies
(OPEC+) could interfere to support crude prices. So, it may not be the best
moment to trade crude.
Gold prices
are moving inside the mid-term upside formation with targets at $2000-2100 per
troy ounce that have already been met. But the situation has changed
dramatically as the important support level of $1980-2000 per ounce was
smashed. Short positions were opened after prices tested the $1970-1980 former
support level with targets at $1890-1910 per ounce. The first half of this
trade was closed at $1910 per ounce, while the second half was left open with
the stop-loss order moved to $1980 to avoid any losses, and amid expectations
of some extra profit.
The
currency market is primarily on halt now, despite the fact that the Greenback
has fundamentals for a further strengthening. But it is too risky to go long on
the Greenback at the moment. It would be better to wait for a decline of the
EURUSD below 1.06000 to seek out sell opportunities for the Greenback.