European and US futures are trading soft today while traders keep their eyes on today’s OPEC meeting. Saudi Arabia commented that it could increase the oil supply if Russian oil supply comes under strain has pushed oil prices lower. Today’s meeting will mainly be about the sentiment, not an actual supply increase. Suppose the message is that the world need not worry about the Russian oil supply due to sanctions imposed on the country by the US and the EU as Saudi Arabia is ready to step up its efforts. In that case, we could see a completely different OPEC going forward.
The sentiment is bearish among investors and traders as they have become even more cautious after JP Morgan’s cautionary note about the health of the US economy. Suppose one of the biggest banks believes that economic headwinds will be extremely strong due to the ongoing conflict between Ukraine and Russia. In that case, soaring inflation adds more fuel to the fire. Indeed, other market participants have similar concerns, and they will be more conservative. All of this points to one thing: prospects of a risk-on rally aren’t strong.
Today is an important day, as it is today that we will get the US ADP number and the US Weekly Jobless Claims data. Traders firmly believe that the US ADP number sets the tone for the most critical economic number, the US NFP number due tomorrow.
Brent and crude oil prices are trading lower today as Saudis have said that they will step up their effort by pumping more oil if the oil supply comes under more pressure due to sanctions on Russian oil. This is undoubtedly a bold move by Saudi Arabia, the biggest oil producer among OPEC members. Previously, Saudi Arabia maintained its stance that the current oil supply is adequate, and more importantly, Saudi Arabia was also a firm supporter of Russia as an OPEC member. It is not that Saudi Arabia has questioned the membership of Russia as an OPEC member. Still, speculators have started to raise their eyebrows as Saudi Arabia has involved itself in Russia and Ukraine conflict.
In terms of oil demand, traders are looking at China and its covid policies. Remember, China is the largest consumer of oil, and now economic activity is returning to its normal level as major cities in China are easing their covid restrictions once again.
Gold prices are trading flat today after scoring decent gains yesterday. When it comes to the shining metal, it is mainly about the dollar index. Today is an important day as we are going to get the ADP economic number which is highly likely to bring wild swings for the yellow metal. Remember, the Fed’s monetary policy is very much dependent on two things: inflation and economic activity. If the economic data shows weakness, i.e., the US ADP number fails to impress Wall Street, we will likely see gold prices moving higher as traders will think that the Fed cannot maintain its hawkish stance.
In addition to this, something else that gold traders are also paying attention to is the fear of stagflation. A warning from JP Morgan’s CEO is a real deal for gold traders as he has a lot of visibility in terms of consumer activity. Yesterday, Jamie Dimon issued a warning by saying a hurricane is heading for the US in terms of economic activity. Remember, gold acts as a safe haven, and speculators are likely to jump on gold when they sense any threat of economic weakness.
Meta, previously known as Facebook, the stock will be an interesting one to watch. Meta has been in the spotlight as an army of developers started to jump ship. Yesterday, the COO of the company, Sheryl Sandberg, also announced that she would be stepping down. Meta is in the midst of the storm, and it is facing all sorts of challenges while Zuckerberg is repositing the company for the Metaverse space.
Terra 2.0 is simply another disaster as cryptocurrency is going through a roller coaster after the failure of Terra 1.0. As we mentioned before, a cryptocurrency collapse like Terra 1.0 is awful for the crypto sentiment.
In addition to this, Solana, an ETH killer, saw another outage yesterday, sending its price plunging. You cannot be an ETH killer if you are having outages of your network that rapidly. Now crypto investors will see Solana through a different lens, and its price may continue to grind lower.
As for the crypto king, Bitcoin, bulls have refused to support the price once again, and the recent bounce in the price has turned out to be nothing more than a dead cat bounce. Traders are now focusing on the next significant price level of 25K, and we must see sizable bids at that price level; otherwise, we are likely to see another bloodbath.