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Oil-Fuelled Bounce Risks Being Torpedoed

Published 13/06/2019, 16:51

Stock market snapshot as of [13/6/2019 3:44 PM]

Cash Indices % Change

  • After a session-and-a-half consolidation of the recent rebound, investors may be in the mood to add more upside, with less emphasis on ‘quality’
  • Thursday’s early-session swing off lows was not entirely down to a sudden spike in oil prices, but it played a large part
  • Both U.S. WTI and Brent benchmark crude oil futures contracts surged almost 5% higher and were last trading up around 3% on the day apiece
  • It follows reports that two tankers were attacked near the Strait of Hormuz; one by some form of projectile “shell”— some reports cited a torpedo—the other suffering three detonations
  • The attacks follow incidents around a month ago when four vessels were sabotaged in the same region. Then, U.S. authorities pointed the finger at Iran, citing naval mines
  • Before news suggesting 35% of the world’s oil supply—the amount shipped through the Strait daily—could be put in jeopardy, risk appetite was thin on the ground
  • Hong Kong protesters appear to be gearing up for more confrontations, whilst Greater China itself and the U.S. seem no nearer to resolving their trade dispute
  • Higher than forecast U.S. weekly jobless claim are keeping the monetary easing narrative going

Corporate News

  • Oil-related stocks are predictably leading in Europe, though it’s worth noting that oilfield contractor stocks saw the most interest after they were dumped particularly hard on Wednesday
  • The high-yielding residential and commercial property sector, as ‘safety’ play rose the most
  • Europe’s tech shares rose 0.5% overall with software strongest. Hardware stocks were dragged lower by telecom equipment makers Nokia (HE:NOKIA) and Telefonaktiebolaget LM Ericsson (BS:ERICAs) Class B (ST:ERICb)
  • Shipping shares surged on the S&P 500 as the tanker attack could inflate shipping rates. Frontline (NYSE:FRO), the owner of one of the attacked tankers jumped as much as 11%

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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