Morning Market Overview

The early morning energy markets are weak yet again this Wednesday, however, the intensity seems to be waning so keep a close eye on the situation. Most major markets remained in correction mode yesterday as we had signaled for the last several days. Global equities led the market lower yesterday with a strong round of profit taking selling for the second day in a row and ahead of the end of the month book squaring on concern that bonds were sold off resulting in an uptick in interest rates.

This led the oil complex strongly lower for the second day in a row even with the US dollar declining slightly on the day, as it appears its upside correction may be over for now. Nothing has changed structurally in any of the markets and until proven otherwise we can still only categorize the moves in oil and other major markets so far this week as still, correction moves.

We remain of the view that there will be more upside in equities as well as oil especially if the dollar remains on the defensive. On the financial front, global equity markets were lower across the board.

The Index decreased with the US market trading strongly lower through Tuesday’s trading session. The EMI Index decreased by 0.80 percent with the year to date gain now at 6.3 percent. Seven of the ten bourses in the Index are still in positive territory for 2018. Canada is in the worst performing spot in the Index with Brazil in the top spot with a 10.6 percent gain for the year. The lower value direction in global equity markets is a negative price driver for the oil complex.

On the currency front, the US dollar Index was lower for the day with the Yen/USD and the Euro/USD higher. Overall the currency markets were a positive price driver for the oil complex Tuesday.