Market Overview: Market Mood on the Mend

Market Analysis /
27 Nov 2018
  • Tech-stock rebound lifts US indices
  • Oil price rebounded following Friday’s steep decline
  • Traders await speech from Fed Chairman Jerome Powell for clues on interest rates

Market mood was on the mend to start the week, with US markets having a rare day of green numbers to start the week thanks to a turnaround in the big-name tech stocks, whilst a successful day of Black Friday sales lifted overall market optimism.

The so-called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google, whose parent company is Alphabet) have been a major weight on US Markets for the last several weeks amid growth slowdown concerns and falling sales, but the Thanksgiving season has for the moment at least seems to have offered some respite from the selling, with the rise in the tech giants proving a positive for the broader market.

The rise in the major US indices coincided with a rebound in the price of crude oil, with the improved investor sentiment allowing for a rebound in the WTI and Brent oil contracts following Friday’s heavy declines. WTI crude settled 2.4% higher at US$51.63 per barrel, though it still has a long way to go to make up for the 7.7% slide on Friday as well as the more than 30% fall since its yearly highs reached last month.

Against a backdrop of historically high production levels from Saudi Arabia, the US and Russia, and in the absence of any production cut announcements from OPEC at least until they meet in December, the headwinds remain significant for the oil price in the short term. But the upcoming OPEC meeting has the potential to shift the momentum depending upon how aggressive the organisation is in addressing the current state of oversupply in the market.

Spot Gold was a bit lacklustre today, with the precious metal lacking any clear direction ahead of some key events later in the week in relation to US interest rates. Fed Chairman Jerome Powell is set to speak on Wednesday and the market will be listening to any clues about the pace of interest rates, whilst the FOMC meeting minutes are also due for release on Thursday. Spot gold was flat at US$1222 per ounce heading into the US close. Elsewhere, the stronger equity performance reduced the demand for Treasuries, which saw US 2-year and 10-year bond prices weaken today.

With Asian futures pointing higher, all signs are pointing to it being a solid day across the region on the back of the strong US lead.

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