Market Report & Analysis for 7/26/2018 Morning Edition

Morning Market Overview

Oil prices rallied Tuesday after trading sideways for the last few days and decidedly lower for the last three weeks. The upside price catalyst was a combination of a new economic stimulus plan announced by the Chinese government as well as the rising tensions between the US and Iran over the issuance of sanctions in November. China announced tax breaks and special lending for infrastructure investment which resulted in a positive nod by the financial markets pushing Chinese stocks higher by over 1.6 percent on the day fueling a broader rally around the globe.

The rally in equities along with a slight decline in the US dollar Index provided positive support for the oil market from the externals.

On the Geopolitical front the tensions between Iran and the US remain at elevated levels as Iran has threatened retaliation if the US goes forward with installing sanctions on Iran in November. For now, it is a war of words with plenty of time left for a negotiated settlement. Currently the market is placing a caution flag on the situation and acting as a floor in prices with a bit of an upside push. On the financial front global equity markets were mostly higher.

The EMI Index was higher for nine of the ten bourses in the Index. The EMI Index increased by 01.14 percent on the day with the year to date gain at 1 percent. Six of the ten bourses in the Index are still in positive territory for 2018 with China still in the worst performing spot in the Index with Australia in the top spot with a 4.8 percent gain for the year. The positive value direction in global equity markets was a positive price driver for the oil complex.