Yahoo Finance Heightened Levels of Volatility Expected in Stocks, Crude Oil and Gold
The new week begins with good, bad and ugly events that could trigger volatile reactions in the stock, crude oil and gold markets.
Firstly, a new survey shows the public approves of Trump’s handling of the economy. This may encourage investors to continue buying stocks even in the wake of tensions over tariffs.
Secondly, China may hit U.S. oil producers in the pocketbook if they follow-through with their threat of tariffs on imported crude oil.
Thirdly, gold investors may finally wake up and start buying the precious metal.
The Good
According to the CNBC All-America Economic Survey, for the first time since President Trump took office in January 2017, more than half the public approves of his handling of the economy, and it appears to be helping his overall approval rating.
The March survey shows the Trump’s economic approval rating jumped 6 points to 51 percent with just 36 percent of the public disapproving.
“Fifty-four percent of Americans say the economy is good or excellent, the highest recorded by CNBC in the 10 years of the survey. Just 43 percent say the economy is fair or poor, the lowest in the history of the survey. Positive views on the economy have surged 20 points since the election. And for the first time, the percentage of Americans saying the economy is excellent outstrips the percent saying it is poor.”
According to the survey, 42 percent said now is a good time to invest in stocks. This figure is 4 points below last year’s average when stocks surged, but still above the long-run average. About 33 percent said they were unsure, which is the highest yet recorded, and 27 percent said it’s a bad time to invest.
The Bad
On Sunday, The Wall Street Journal reported that President Trump plans to bar several Chinese companies from making an investment in U.S. technology. The WSJ went on to say that the Trump administration wants to block additional technology exports to China. Trump is expected to make the announcement later this week. However, investors are already expressing displeasure with the move by drilling the Dow Jones Industrial Average at least 250 points lower early Monday.
Some traders are wondering if this is the move that finally pushes China over the edge with the world’s largest economy announcing tariffs on imported U.S. crude oil. China could slap a 25-percent tariff on U.S. crude. The loss of the Chinese market would likely drive down prices for American oil producers and cause almost immediate economic hardship for U.S. drillers.
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The Ugly
Does anyone want to own gold? According to the U.S. Commodity Futures Trading Commission, speculators in COMEX gold trimmed their net long position to the weakest in 2 ½ years in the week to June 19. Buying is being weighed down by expectations of higher global interest rates despite tensions over a global trade war. However, contrarian thinking suggests professionals may start buying soon once the price hits a value area on the charts.
This article was originally posted on FX Empire
