Slumping Oil prices give stocks a boost

Chris Beauchamp IG

Markets have seen yet another 180-degree turn in sentiment, says Chris Beauchamp, Chief Market Analyst at online trading and investing platform IG.

What a difference a week makes

A week ago markets were grappling with a possible slowdown in AI development, worrying about a cutoff in Saudi oil supplies and bracing themselves for a Fed rate hike. Talk of a slowdown has disappeared, Saudi oil supplies are holding up better than feared and the first Fed rate hike of a possible new cycle is behind us. Sentiment has shifted accordingly, and today looks like the start of a much more durable rally. The ingredients are there – an earnings-driven rally bolstered by signs of continued chip demand, coupled with a suitably hefty drop in oil prices to help bullish sentiment.

Receding threat of triple-digit oil prices

Ultimately crude oil continues to be the biggest driver of stock markets. Just as it seemed a return to the March highs was on the cards, so Trump has pulled back from escalating the Houthi-Saudi conflict. While not a resolution of the conflict, the recent flare-up has faded away, and an absence of triple digits in oil prices is still the foundation for every recovery in risk appetite.

Author

Chris Beauchamp

Chris Beauchamp has been with IG for four years, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News.

AUD/USD sticks to neutral bias above 0.7100 amid cautious markets

AUD/USD holds steady above 0.7100 in the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. The PBOC status quo on Loan Prime Rates also weighs on the Aussie. However, bets on another RBA rate hike continue to underpin the Australian Dollar ahead of the Trump-Xi Summit.

USD/JPY eases below 157.00 amid looming intervention risks

USD/JPY is easing back below 157.00 in Asia on Monday, undermined by modest Japanese Yen strength amid looming intervention risks after Friday's BoJ rate check. A Japanese holiday also keeps traders on edge amid escalating geopolitical tensions between Russia and Ukraine and in the Middle East. As a result, the US Dollar pauses its pullback, limiting the pair's downside.

Gold meets resistance around $4,400

Gold kicks in the new trading with on the back foot, keeping its trade near $4,350 per troy ounce. The precious metal’s correction comes on the back of the firmer US Dollar and espite declining US Treasury yields across the curve.

Bitcoin hits $85,000 for the first time in eight months

Bitcoin price reclaims $85,000 on Monday, advancing last week’s 5% recovery toward an eight-month high. The recovery in King Crypto aligns with renewed institutional demand, with Exchange Traded Funds (ETFs) recording $433 million in inflows on Friday.

The week ahead: Fuel prices in focus as we lead up to key eco releases

Financial markets are in a strange position as we move to the final weeks of Q3, uncertainty and volatility continue to grip markets, but the oil price is falling; and European and US stocks are poised to open higher later on Monday. Market stresses are concentrated in sovereign bonds, and European and US yields had another scare late on Friday, and moved higher.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.