Sea of red in markets as headwinds grow

Markets on shaky ground as FAANG stocks sit in bear market territory

A sea of red across equity markets suggest we’re heading for another turbulent session as investors come to terms with another sell-off on Monday and an increasingly wobbly tech sector.

With FAANG stocks now all in bear market territory and not yet coming to the rescue of the rest of the market, investors have been left wondering if this is going to get messy or whether Black Friday has come a little early in stock markets. There still appears to be a lot of underlying anxiety in the markets which may prolong the current sell-off a little longer, with trade wars, US interest rates, Brexit and the Italian budget standoff all being significant headwinds.

A number of these could subside in the coming weeks, which may put investors at ease a little, although of course that assumes worst case scenarios in each don’t materialise which particularly in the case of Brexit, they could. This could lay the groundwork for the fabled Santa rally as we enter the final weeks of the year.

Commodities Weekly: Palladium hits record high, nears gold price

Sky no longer the limit for bitcoin, ground below looking increasingly unsteady

Volatility has returned to the crypto space after months of increasingly tighter ranges and relatively sparse news flow. Unfortunately, contrary to last year, the news that’s flowing is mostly bad and while the size of the moves are rather familiar, the price action is in the opposite direction. As we quite often see in this space, negative news is rarely confined to a particular instrument and once the Bitcoin domino falls, the rest quickly follow.

To be honest, this has been building for some time. Enthusiasts may have looked at bitcoin’s ability to hold above $6,000 as a sign of a market bottoming but the warning signs were there each time it failed to make a new high on a rebound – most notably in March, May, July and even September.

Bitcoin (Bitstamp) Daily Chart

Source – Thomson Reuters Eikon

The bitcoin cash fork came at an opportune time as the volatility had been squeezed out of the market and the result if the sharp sell-off we’re now seeing. It’s always difficult to say were the market could stabilise again in such a wild market but $3,000 looks an interesting level. This time last year, the sky was the limit for bitcoin and all the altcoins that piggybacked a ride, this year the ground below is looking very unsteady.

Price action is swirling around this week’s key drivers. Dovish Fed, Brexit and Trade War

Oil slips after brief reprieve

Oil prices are on the decline again on Tuesday following a brief bounce that failed to generate any real upside momentum. The prospect of a production cut at the next OPEC+ meeting in a couple of weeks following a recommendation from the JMMC hasn’t managed to reverse the trend as of yet, with traders potentially weighing up recent comments from participants against the inventory and output data and deciding the bullish case isn’t strong enough.

Oil (WTI and Brent) Daily Chart

OANDA fxTrade Advanced Charting Platform

Brent and WTI continue to find support around $65 and $55, respectively, although I wouldn’t write off the possibility of another drop in both to around $62 and $50 ahead of the meeting. Despite the sometimes mixed messages we’ve had of late, I think members will want to avoid a repeat of the moves in recent years and will step up to stabilise output with another cut. Whether that will be enough to have the desired effect will depend on the size of it.

Economic Calendar

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