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Week Ahead: Stock Market On the Edge, Oil Prices Move Higher

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In the week ahead, stock market traders are on the edge as number of important economic events could make or break the sentiment among stock market traders. Oil prices have started the week on a positive note and here is why

Week Ahead

Investors in Europe and the US are preparing for a volatile week as the economic docket is full of fireworks. Since last week, concerns about the Fed’s interest rate cycle have begun to surface once again, as many speculators believe that there are greater chances that the Fed will use more gunshot in terms of interest rates going into the next month’s meeting.

Stock Market Now

This is mainly because of the economic data that was released last week, and things are likely to become more stable this week in light of the economic numbers that are due this week. The key economic number for the US this week will be US inflation data, which is likely to influence everything from stocks to forex to fixed income to commodity prices. The consumer price index numbers are scheduled to come out on Wednesday, and the consumer price index data will be released on Thursday. Due to the fact that oil prices are very much moving in one direction only, the fear among investors is that we are more than likely to see a trend in the inflation data, which would upset many on Wall Street, especially the Fed.

As for European investors, they are likely to remain on their toes this week as the European central bank will announce its monetary policy decision this week. The European Central Bank is expected to take a closer look at the current economic conditions of the Eurozone’s biggest economies, and traders are expecting that the bank will not make any decision that will cause a need for urgent treatment in the emergency rooms. Yes, it is true that economic conditions are very fragile and the overall Eurozone is highly sick as economic activity remains immensely slow, but signs are emerging of some recovery. And if the ECB takes any notorious action, such as sending an ultra-hawkish message in terms of its interest rate or increasing interest rates, going into their meeting this week, we could potentially see some consequences for which many would not have prepared themselves.

So overall, calm sailing is what many are expecting from the ECB for this meeting, which means that this month there will be no hike in the interest rate from the ECB.

Oil Prices

Oil prices continue to remain highly interesting, and this is because bears are having an extremely difficult time taming the current bull run that is taking place. For instance, despite slow economic activity in China, Brent oil prices continue to trade above the level of 90, which sends a very strong signal to bears: this is not the time to fly against the wind. Brent oil prices have already posted two consecutive weeks of strong gains, and the chances are that the price will win its major battle on the weekly time frame against the 100-week moving average, which is trading around 91.

Oil prices now

This can happen on the back of economic numbers that are scheduled to come out from the US and Europe. If central banks do not take any aggressive action in terms of their monetary policy, their action is likely to be taken as positive by traders, which means a more positive growth outcome. And strong growth prospects usually mean that prices are likely to move.


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