Investing.com | Sep 16, 2019 12:23
Brent prices posted their biggest daily surge on record this morning, while broader markets shifted to risk off on heightened fears that flaring Mideast tensions and surging oil costs will weigh on a struggling global economy.
A concerted drone attack—claimed by Iran-backed Yemenite Houthi rebels—knocked out half of Saudi Arabia’s oil facilities on Saturday and 5% of the global supply after crippling the world's biggest crude oil processing plant.
U.S. Secretary of State Mike Pompeo characterized the attack as targeting the global oil supply. Pompeo also denounced Iran for pretending “to engage in diplomacy” and said the country will be "held accountable for its aggression." The U.S. administration released satellite images showing the attack would have been more easily carried out from either Iran or Iraq. President Donald Trump followed up with a tweet of his own, saying the U.S. is “locked and loaded depending on verification.”
Iran denied accusations, calling the U.S. deceitful and declaring it was ready for a “full-fledged war.”
Brent futures jumped almost $12 at the open, or nearly 20%, the biggest price leap since 1988—when the global benchmark launched—after the largest supply-disruption shock ever.
Prices later pulled back to about 8% higher by late European morning, but were still heading for the biggest advance in almost three years. Technically, the price gapped above the downtrend line since April 25.
From a technical perspective, the hourly price completed a double top and fell below its uptrend line since Sept. 3, and is now struggling to climb back above the neckline.
Europe's STOXX 600 halted a four-day advance following a mixed session in Asia.
Here, Japan’s Nikkei (+1.05%) outperformed. Hong Kong’s Hang Seng dropped 0.83% and China’s Shanghai Composite held relatively steady (-0.02%) after Chinese industrial production figures missed the monthly forecast, adding to signs the country’s economy is slowing down.
In the bond market, the yield on 10-year Treasurys took a dive, paring a 30% gain—to a six-week high—from the Sept. 3 bottom. From a technical standpoint, the slip was facilitated by the rate nearing the downtrend line resistance since November 2018.
Gold has been developing a small H&S top. While market turbulence is showing signs of easing, if geopolitical tensions increase, the yellow metal is likely to flip its market dynamics, propelling prices past the Sept. 4 high of $15,57.09, to extend the uptrend.
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.