Markets stay positive, oil rallies

Stock markets are making decent gains again on Tuesday, continuing to pick themselves up after a tough start to the year.

Some may be encouraged by what we’re seeing this week, with less focus on the Reddit rebellion as silver continues to give back some of its gains, but I’m just not convinced. For starters, I don’t think the Reddit crowd will disappear that easily, although it may have to rethink its strategy after its recent foray into precious metals.

Investors have also not been in a particularly upbeat mood since the turn of the year and I don’t think we’ve seen enough of a correction to draw them back in. Whether it was the “taper tantrum” talk, lack of interest in earnings or being spooked by the retail community, it’s not the behavior of the buy the dip crowd we’ve seen so much of over the years.

The first quarter was always going to be a challenge and that’s what we’ve seen unfold. The rest of it has been a bit of a sideshow and the narrative has very much fit the behaviour we’ve seen. But following a bumper end to 2020 on the back of a long list of positive events was always going to be tough as countries went back into lockdown one after the other.

The start of the week has been encouraging and the earnings season could yet get investors excited again, with results from Amazon and Apple to come later today. These two names performed well yesterday, perhaps in anticipation of knockout quarters. Should we see strong results and immediate profit-taking – classic buy the rumour, sell the fact behaviour – it won’t do much for sentiment into the end of the week.

Oil breaks above range amid colder weather

Oil prices are rallying strongly once again and broke through the upper end of their range today on the back of strong momentum. A surge on Monday was followed with a breakout today as risk appetite improved in the markets. Colder weather has also been touted as a reason behind the sudden spike in prices but the important thing is that it ends the period of consolidation. We’re seeing some resistance around USD58 in Brent, USD55 in WTI, and a break of this could see it pushing USD60.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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