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.
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.