Investors pending on geopolitical tensions and turbulence in oil markets

The weekly opening is being conditioned by this weekend’s attacks with drones against oil production facilities in Saudi Arabia and the disappointing economic data from China, two factors that triggered risk aversion.

Texas WTI oil prices rose 16% at the weekly opening, after it was known that attacks on Saudi facilities will reduce production by 50%, which is 5% of world production. It is the biggest interruption in the supply of crude oil in history, which also caused a historic rise in oil prices.

The president of the United States, Donald Trump, authorized the use of the country’s emergency reserves to guarantee the oil supply and also he said the country will respond to the attacks he attributes to Iran. For its part, Saudi Arabia has said that it is prepared to restore half of the production this Monday.

Fears about the increase in tensions in the Middle East and the relationships between Iran and the United States are not liked by investors, since the approach between both countries that had taken place at the G7 summit recently held in France has vanished.

This Wednesday we will know the Federal Reserve interest rate decision, the Fed is expected to reduce interest rates by a quarter point, although a cut of half a percentage point is not ruled out.

On Thursday, the Bank of England will hold its meeting on monetary policy, in the face of the BOE meeting, today’s meeting between British Prime Minister Boris Johnson and the President of the European Commission, Jean-Claude Juncker, will be decisive as they will try to renegotiate the agreement on Brexit.

In Asian markets, the Nikkei 225 of Japan remained closed for holidays, the Japanese index was last Friday one step away from overcoming the barrier of 22,000 integers. The Shanghai Stock Exchange closed on Monday with a 0.016% decline at 3,030 points, after macro data showed that China’s industrial production fell unexpectedly at its lowest rate in 17 years, from 4.8% to 4,4%, while retail sales fell from 7.6% to 7.5%, and a rise to 7.9% was expected.

Wall Street closed Friday’s session with mixed sign, the Dow Jones got 8 sessions upwards by scoring 0.24% to 27,247 integers. The S&P 500 fell 0.07% to 3,007, while the Nasdaq market composite index closed down 0.22% at 8,176 points.

The main European indexes have started the week with generalized falls that reach 0.53% in the German DAX 30, 0.22% in the FTSE 100 in London and 0.57% in the Euro Stoxx 50. The Ibex 35 , loses 0.49% and returns to below 9,100 points.

In the currency markets, attacks on Saudi Arabia boosted the currencies of the major oil exporters countries such as the Canadian dollar, which is now rising to $1,3257.

In the European opening the dollar index trades at 97.70 points, below the key support located in the 98 zone. The euro remains stable, trading at around $1.1070 where it closed last Friday, while the British pound moves back moderately to $1.2460.

In commodities markets, the WTI barrel is trading at $59.60 and the price of spot gold remains slightly above $1,500 per ounce. In the WTI chart, you can see the bullish gap that registered US oil at the Asian weekly opening.

In economic terms, attention will be focused on the publication of the Italian CPI and the manufacturing index of the New York Fed. The US Treasury will issue bonds at 3 and 6 months view.


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