The energy sector is on track to post a 12% second-quarter gain as crude prices finish Q2 with their fourth consecutive quarterly rise. The move is notable given the volatile environment, and derives significantly from fears of Iranian supply disruptions, but Saxo Head of Equity Strategy Peter Garnry says that it could prove vulnerable to any intensification of the trade war.
"The Iranian focus has certainly overshadowed the Opec+ production rise deal," says Saxo commodities head Ole Hansen. Hansen also reports that gold is set to post its worst month since November 2016 at the end of June, with prices having faltered significantly as safe-haven investors flocked to the USD and US bonds instead of the yellow metal.
"Looking at the XAUUSD chart, the double bottom formation at $1,246/oz could trigger a rally if prices break north of $12,56/oz," Hansen says.
In forex, Saxo Bank Head of FX Strategy John Hardy reports that the euro soared overnight as the European Union apparently reached a deal on migration, with the still-rather-vague agreement apparently centred on the establishment of 'migration centres' across the EU and in Africa.
The presence of a deal – any deal – is being taken as bullish due to the major fault-lines within the EU and even within Germany and Chancellor Merkel's own party on this issue.
"We saw EURUSD reach a high of 1.1660 overnight... I have a hard time figuring out whether this will last," says Hardy.
For more on equities, commodities, forex, and the recent Fed stress tests on US banks, watch today's Morning Call in full.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
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Peter Siks,
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Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
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