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.