Crude oil is creating a rare pattern we haven't seen since 2016

Daily Analysis - 01/11/2018

Correlations between Crude Oil and Stocks

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According to energy expert John Kilduff, Oil is creating a unique correlation to draw down equities.

Now the oil and stocks have started a very close trading association since early 2016 and through the economic disaster sell-off. On Tuesday Again Capital founding partner said on CNBC "This has been the highest correlation that I've seen in quite some time." His newest ideas developed amidst U.S. benchmark West Texas Intermediate crude been on its worst month in more than two years. On Tuesday WTI closed at $66.40 a barrel, while Brent crude ended at about $76.22. Kilduff, a CNBC contributor said, "A lot of folks like to trade crude oil and other commodities to get away from the correlations you have in the stock market,"  "But over the past 20 days, you can see where stocks peak out in early October. Crude oil peaked out in early October." He recommends that concerns over a global financial retardation could be behind the unusual move. He said, "It's a real risk off, and the same things that are bedeviling the equity market are bedeviling the crude market.”

Asia stocks mostly start the month positive


On the first of November shares in Asia were largely higher trading following a wild October that socked stocks in the region. Hong Kong's Hang Seng index traded 1.72% higher in afternoon meanwhile the Greater China markets got profits, with the Shanghai Composite advancing 0.13% to close at about 2,606.23 and the Shenzhen composite up by 0.930% to close at around 1,306.30. Now, as for Japan's Nikkei 225, it dropped by 1.03% to close at 21,687.64 while the Topix shed 0.85% to close at 1,632.00. Technology-based titans were in focus, with shares of Panasonic falling 5.63% and conglomerate Softbank diving about 8.10%

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Great day for Sterling after a report of Brexit deal


On Thursday GBP went higher toward a report released that UK Prime Minister Theresa May has reached an agreement with Brussels on financial services, while the greenback stayed near at a more than a year top versus a basket of its key competitors on strong U.S. economic data.

The USD marked a support overnight following the ADP national employment report confirmed that U.S. private-sector payrolls rose by the most in 8 months, last month, verifying that the economy remains to develop at a relatively healthy pace. That strengthened expectations for more rate hikes by the Federal Reserve, with a 25-basis-point hike seen in last December and probably two more in 2019.

 

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European markets open the month lower, focus on Brexit


On Thursday morning European stocks start the day below the current levels, while investors settled for another set of profits at the same time the pound surged on a report recommending a Brexit breakthrough for financial services companies. Market attention is mainly adjusted to Brexit progress following the Times published that U.K. Prime Minister Theresa May had agreed on terms with Brussels that may provide British financial services firms to continued access of European markets after the Brexit.

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