by David Jones, a Chief Market Strategist at Capital.com
It’s likely to be another volatile week for traders and investors in all markets. The global focus is going to be still on stock markets. US earnings season continues and last week did see stock markets trying to stage a recovery from their recent sharp falls – only to give up those gains on Thursday and Friday. Investors do appear to be still very nervous when it comes to stocks – after years of almost stress-free gains, the sharp sell-offs that we have seen this year (in February and October) have served as a reminder that investing is not without its risks – some of them quite sharp and sudden. The latest updates we have seen from US companies have been encouraging – but this has not as of yet convinced investors that maybe markets around the world still look a little on the expensive side, and maybe a bit more patience could see bargains in the months ahead.
Currency markets are also unlikely to be quiet. This Thursday sees the latest interest rate decision from the European Central bank. No change is expected – but the press conference after the decision does occasionally have the potential to deliver some fireworks. And of course for the pound the Brexit negotiation saga stumbles along – as does discussion of just how long Prime Minister Theresa may has left in the job. This is a market that remains very vulnerable to political rumours and there is no reason to think that this week is going to be any different, so expect shocks!
Last week saw US Crude Oil slip below $70 a barrel for the first time in a month. The oil price has lost around 10% over the past couple of weeks – but since the summer of 2017, falls have only served to bring buyers back in. At the moment that would be the expectation for this week – although Friday’s US GDP economic data could put a spanner in the works here if it comes in showing growth is lower than expected. And finally gold has regained its shine amongst investors – with stock market weakness definitely helping here. It continues to hold in the $1220 area, its highest since the end of July. Given the nerves that remain in stock markets, gold could well experience a much better finish to the year than it has seen in recent months.