Global stocks were left vulnerable during trading on Monday as the horrible cocktail of mounting Brexit concerns and plunging oil prices soured investor risk appetite consequently renewing a wave of jitters. With the anticipated E.U referendum vote on the 23rd of June less than two weeks away, most major markets have been left depressed and could be poised to trade lower when investors scatter away from riskier assets. In Asia, equities were dragged lower from tepid China data, while the Yen’s resurgence amid an atmosphere of risk aversion installed another round of selling in Japanese stocks. European markets took a hit from retreating banking stocks and could venture deeper into the abyss if declining mining stocks encourage bears to pounce again. Although Wall Street displayed resilience with the S&P 500 previously smashing 10-month highs, prices could be set to decline for an extended period as the toxic combination of fading US rate hike expectations, Brexit woes, falling oil prices and ongoing concerns over the global economy create a risk-off trading environment.
Brexit vs Bremain climax
The elevated concerns and mounting anxiety ahead of the E.U referendum vote on the 23rd of June has created a contagion, which continues to haunt investor attraction towards not only the Sterling but riskier assets. Volatility has intensified to unfathomable levels while uncertainty nears a peak following the conflicting polls which continue to leave the majority of investors on edge. While we remain uncertain over whom the victor may be on the 23rd, it is certain that the Sterling is left vulnerable to further losses as investor attraction periodically diminishes. It seems likely that major financial heavy weights may go full throttle in unleashing all their points on the pros and cons of a Brexit this week, and this may simply intensify volatility and punish the pound further.
The GBPUSD has suffered greatly from the Brexit commotion and could be poised for a steep decline if Sterling bears install another round of heavy selling. From a technical standpoint, the GBPUSD is heavily bearish and the prerequisites of a bearish trend have been fulfilled with lower lows and lower highs being created. Prices have plummeted towards 1.4100 and could trade towards 1.400 once a solid daily close below 1.4100 is achieved.
WTI Crude falters
WTI Crude tumbled towards $48.50 during trading on Monday as concerns over the state of the global economy, coupled with a slight Dollar appreciation, encouraged bearish investors to attack. WTI remains fundamentally bearish, and could be set to sink lower when the concerns over the excessive oversupply overshadow the bullish effects of the short term production disruptions from major oil export nations. With Iran on an ongoing quest to reclaiming lost market share and expectations dim over a potential OPEC freeze deal, bears have been gifted another opportunity to send oil prices lower. From a technical standpoint, WTI is still under pressure and a breakdown below $48.50 should open a path towards $47.00.
Commodity spotlight – Gold
Gold surged uncontrollably during trading on Monday with prices rallying towards $1285 following the mounting Brexit anxieties and concerns of slowing global growth that reinforced the metal’s safe-haven allure. The risk-off trading environment should provide a platform for bulls to install a heavy round of buying while fading expectations over the Fed taking action in Q2 may keep the metal buoyed. Gold bulls could be back in town and ongoing Dollar weakness should open a path back towards $1300 and potentially higher. From a technical standpoint, prices are trading above the daily 20 SMA while the MACD has crossed to the upside. A breakout and decisive daily close above $1285 could encourage a further incline towards $1300.
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