Markets are reacting to a host of new geopolitical concerns, as well as a deadly U.K terror attack. Four major Gulf states have decided to band together in cutting relations with Qatar, over joint allegations that the oil-producing country is supporting terrorism. This is having major implications in the crude oil market, and has injected anxieties around the controversial but strategis U.S military ally. Upcoming significant events this week include former FBI Director James Comey’s Thursday testimony to the Senate Intelligence Committee and the narrowly contested U.K. general election.
Comey’s testimony will be highly significant and watched around the world. His testimony about the events leading up to his firing by President Trump will inform public sentiment around the U.S-Russia investigation, and whether or not Comey was pressured to drop the probe. In the U.K., Prime Minister Theresa May will attempt to maintain a majority in parliament and any disruption to current plans to exit the E.U. will introduce degrees of uncertainty.
Because corporate earnings season is coming to an end, investors and analysts will be more attuned to central banking activity, geopolitical news and the minutia of economic data. In particular, this week will see a European Central Bank meeting in Estonia. Any indication of future decisions around its economic stimulus program will be sought after from looking at the minutes and comments.
The DJIA is currently down 0.05%, or 10.13 points, at 21,195. The Nasdaq-100 is down 0.18% at 6,294 and the S&P 500 is currently trading at 2,436 which is down 0.12% from the open.
Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows three trading sessions of positive movement, followed by negative directions. Today’s positive vector figure of +0.19% moves to -0.22% in the next four sessions. Today’s support and resistance is 2,433.17 (± 3.00) and 2,444.17 (± 3.01), respectively. The predicted close today is 2,440.40.
Crude oil markets are seeing turbulence today after a recent joint decision by four major Gulf states to cut ties with Qatar over claims that the state supports terrorism. Saudi Arabia, Egypt, Bahrain, and the U.A.E. have also declared that they will shut down both air and sea routes to Qatar, impacting trade and oil production and delivery logistics. The decision was made at the risk of Qatar deciding not to continue to uphold OPEC-defined production cut agreements, which may set off a domino effect and encourage other participating oil producing countries to cheat. West Texas Intermediate for July delivery is currently priced at $47.16 per barrel, down 1.26% from the open.
Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent negative movement building incrementally. The fund is currently trading at $9.76, which is down 0.96% from the open. Today’s prediction sees support at $9.64 (± 0.09) and resistance at $10.02 (± 0.09). The predicted close for today is $9.75. Vector figures show -0.21% for today, progressing to -0.95% within three trading sessions. All vector figures are based on today’s market conditions.
The price for August gold is currently up 0.16% at $1,283.40 a troy ounce. A recent U.S jobs report has underperformed against forecasts for May, and this weekend’s London terror attack has introduced fear and uncertainty. Weak economic data leads to speculation that Fed interest rate hikes are less likely, which makes gold- a non-yielding asset- a perceived safe-haven. Two significant events this week have also introduced geopolitical uncertainty and thus driven investment into the yellow metal. The upcoming U.K. general election will determine how Great Britain’s exit from the E.U. may progress, and former FBI Director James Comey’s Thursday testimony to the Senate Intelligence Committee will have a range of political impacts for the Trump administration.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows consistent downward movement. The gold proxy is currently trading at $121.71, up 0.08% from the open. Today’s predicted low is $120.21 (± 0.27) and the predicted high is $121.77 (± 0.27). The predicted close today is $121.17.
Another round of underwhelming economic data and reports are pushing Treasury yields higher today as bonds fall. The ISM nonmanufacturing index is showing a drop from 57.5% to to 56.9% in May, from the previous month. An disappointing jobs report that failed to meet or exceed forecasts has also contributed, as well as aforementioned geopolitical concerns. Investors and analysts have yet to alter the consensus that there will be a Fed rate hike in June, however. The yield on the 10-year Treasury note is currently up 0.64% at 2.18%. Bond prices and yields are inversely related to one another.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see an overall negative trend in our 10-day prediction window. Relative to current conditions, we see vector figures moving from +0.01% today to -0.41% in three trading sessions. The ETF is currently priced at $125.01- down 0.49% from the open. The predicted close today is $124.97 with a low and high of $124.78 (± 0.32) and $126.36 (± 0.32), respectively.
The CBOE Volatility Index (VIX) is currently down 0.72% at 9.68, and our 10-day prediction window shows continued downward trends. The predicted close today is 9.22 with a negative vector of -4.70%. Today’s predicted lows and highs are 8.89 (± 0.28) and 9.98 (± 0.31), respectively.
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