Volatility on Monday was low due to today’s July 4th celebrations meaning the US trading markets will not be trading. As a result, the US Dollar and US stock market rose slightly but remained more or less at similar levels. Yesterday, the US government confirmed that the Treasury Secretary, Mrs. Yellen, will visit China later this week. Investors reacted positively, hoping meetings would result in closer ties and supply-chain eases. However, this has been thrown into doubt this morning as China announced a new round of sanctions against the US and Europe.
This reminds investors that the road to closer ties with the world’s largest two economies will not be easy. China announces restrictions on material specifically used to create “chips”. According to China, The restrictions aim to protect national security and interests. This is a very similar stance that the US took last month, and China’s move is clearly in retaliation. According to officials, exporters must seek permission to ship specific products.
As a result, certain stocks such as NVIDIA, AMD, and Micron Technology may come under pressure. Investors should also note that NASDAQ is specifically connected to chipmaking companies and Semiconductors. For example, AMD stocks have declined by 0.33% and Qualcomm by 0.35% after the market close. Volatility levels after market close tend to be low. Therefore, a decline of 0.35% is deemed to be sizeable.
OPEC Meeting and Crude Oil
Investors will also be turning their attention to the oil market ahead of OPEC’s meeting tomorrow in Vienna. Representatives from the world’s largest oil exporting countries will attend, and investors will look for any indication or decision on further supply restrictions. OPEC members have been cutting production since last November due to weaker Chinese economic activity and the US increasing production levels. However, the group has not reached its target of $80 per barrel. This is mainly due to the restrictive monetary policy.
Crude and Brent oil prices have experienced sharp price spikes after Saudi Arabia and Russia announced production cuts. This week, Saudi Arabia confirmed they would voluntarily decrease production levels by 1 million barrels in August. This is something Saudi Arabia has had in place throughout 2023. Russian Deputy Prime Minster, Mr. Novak, has also advised Russia will cut exports by 500,000 barrels per day in August. The announcements triggered a 2% spike in Crude Oil prices. However, momentum still needed to be maintained. Investors will now be monitoring tomorrow’s developments.
Further cuts can support the price further, as can positive economic data, including this Friday’s US employment data. However, it should also be noted that if the price of Oil and energy products increase, it can result in pressure for equities, including individual stocks and indices.
Bitcoin - Blackrock Application Bolsters BTC
The applications to form Bitcoin ETFs by Blackrock, WisdomTree, Invesco Ltd, Valkyrie Funds, and Fidelity Investments continue to support the price of Bitcoin. Bitcoin has increased by 14% over the past 30 days and 1.82% since Friday. Over the past 24 hours, the total cryptocurrency capitalisation has risen by 0.76% to $1.22 trillion. Bitcoin’s market share has risen over the past 24 hours to 49.57% (0.21% higher than Monday).
The chances of successful applications are relatively high for Blackrock since the corporation has been actively cooperating with regulators for a long time. According to cryptocurrency experts, the new type of funds will support the acceptance of cryptocurrencies by institutional investors and potentially result in a gradual increase in the BTC rate. Positive economic data and higher investor sentiment also support the price of Bitcoin.
The price of Bitcoin is currently attempting to break above the $32,350 level renewing its highs to a 12-month high. The regression channel is currently below the price, indicating the asset still may gain bullish momentum, but ideally, investors will be looking for a breakout of the $31,392 resistance levels.
Gold - RBA Keeps Interest Rates at 4.10%
The price of Gold has been rising in value for four consecutive days taking advantage of the possibility of another interest rate pause. The asset has formed three bullish impulse waves and is attempting to create its third. If the asset breaks above the $1,930 level, price action will show a further upward trend. However, a retracement can see the price potentially decline to $1,918. If the price breaks below $1,918, the instrument may experience a full price correction. Nonetheless, crossovers and regression channels are pointing towards an upward price movement in the short term.
For the instrument to maintain its bullish price movement, investors will be hoping for a weaker Dollar and multiple central banks opting to pause their hiking cycle. For example, the asset is being supported after this morning’s decision by the Reserve Bank of Australia to leave the interest rate unchanged at 4.10%. Investors' previous expectation was a small hike of 0.25%.
Summary:
- Investors are still determining if US-China meetings will be able to bear fruit after China restricts exports of raw materials essential to chipmaking.
- Oil prices rose after Saudi Arabia and Russia announced further cuts to production levels ahead of tomorrow’s OPEC meeting.
- The RBA’s decision to keep interest rates at 4.10% supports Gold prices, but will other central banks also pause?
- Applications to form Bitcoin ETFs continue to support the price of BTC and market capitalization.
