On Friday, positive sentiment continued to dominate in global markets. US markets kept on restrained gains as-SP and DOW updated the historical maximum once again. The published statistics data was again positive and strong- the University of Michigan consumer confidence index in the past month increased from 85.2 to 88.9 points. The index returned to yearly highs. On Saturday, the long-awaited meeting of OPEC and non-OPEC countries ended with particular results. As reported- the total amount of oil cuts was 558.000 barrels of crude oil per day. The Russian Federation has pledged to cut production by 300,000 barrels a day next year. Mexico agreed to cut 100,000 barrels, Azerbaijan is due to decrease production 35,000 barrels. As a result, the oil market began the new trading week with a significant gap- Brent crude oil futures opened at $ 56 per barrel.
Today, European stock indexes fell slightly -investors begin to focus on FED meeting, in the middle of the week. The two-day meeting of the Fed will start on Tuesday, the regulator will announce its rate decision on Wednesday. As expected by most analysts, the Fed decides to increase rates by 0.25%. In spite of the almost 100% market confidence in raising rates, intrigue persists. US indices futures traded in the red in the first part of the trading session.
Earlier, Asian stocks closed mixed, reacting to rising oil prices on the one hand and the concerns with the China regulators on the other. On Friday, China's insurance regulator has banned Evergrande insurance company in investing in stocks. Restrictions on trading freedom is always perceived with caution by markets. (Nikkei Stock + 0,84%, S P ASX 200 + 0,04%, Shanghai Composite -2,47%)
Despite the positive news background, from a technical point of view, the oil market now looks vulnerable to a technical correction. We cannot exclude a technical pullback in the area of $ 55 to $ 55.50 and the gap closing.
In the FOREX market on December 12, the US dollar was trading subdued relative to other major currencies, amid trader’s reluctance to take risks in current conditions, in anticipation of the Fed meeting this week. It is widely expected that the basic interest rate may be hiked during the Fed's meeting. Despite this, the US currency looks "overheated". Trading activity on the FOREX is low.
Despite the yearly highs in the oil market, and the overall positive background, stock indexes traded in neutral with a slight downward trend. Markets look caution before the Fed meeting and the fact the indexes are kind overbought. In the current conditions long position look more than risky. Otherwise, there is no reason to sell given the positive market sentiment and upcoming Christmas season. Today we expect moderate trading with low activity and local correction on the main index and probably on the US dollar market.