Crude oil fully pared post-OPEC gains yesterday, as Saudi’s lonely production cuts and the quota transfer from African countries to UAE raised question about the hit-power and the health of the cartel.
As a result, the barrel of American crude fell below the $72pb mark. The risks are now tilted to the downside because the OPEC meeting was the major upside risk for oil bears and it’s cleared for now.
Oil stocks kicked off the week on a depressed note. Exxon tested the 200-DMA yesterday but failed to clear resistance amid the very short-lived post-OPEC oil rally. Exxon closed Monday’s session 0.44% lower, and Chevron lost 0.48%. Still, it’s more interesting to have a positive exposure to oil stocks than to oil itself, as oil companies accumulated a big amount of cash during the post-pandemic and Ukrainian war months, and they can simply acquire smaller rivals to boost revenue and growth.
$3500 per headset
Apple revealed its much-expected VR headset yesterday, just after its stock price hit a record, but the $3500 headset failed to convince investors that it will be the next big thing. It’s too expensive to democratize and rivals’ efforts haven’t paid much so far. Giving a fancy design to a product of little-interest may not be the next big thing for Apple.
Elsewhere in tech, Nasdaq 100 is up by more than 35% since the start of this year, and according to a Deutsche Bank report the volume of call-option buying in tech and Mega Cap Growth stocks is now approaching the highest levels of the pandemic era – despite the Federal Reserve’s (Fed) 500bp rate hike, and its pledge to do more. For now, there is no major sign of a reversal in appetite for Big Tech.
But we have signs that the major central banks are not done surprising to the hawkish side just yet. The Reserve Bank of Australia (RBA) hiked the interest rates by 25bp to 4.10% at today’s meeting, defying economists’ expectations of status quo. ‘Fighting inflation’ remains the primary focus, the bank said. The AUDUSD jumped past the minor 23.6% retracement on February-May retreat and cleared the 50-DMA at 0.6660. The surprise hawkish move, along with a rebound in iron ore price could further support the positive move and send the pair above its 200-DMA, which stands a touch below the 67 cents level.
Bitcoin fell more than 5% yesterday after the SEC accused Binance and its CEO Zhao of being ‘engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law’. Big cryptocurrency institutions’ misfortune could shake the market, but the cryptocurrencies, themselves, remain impressively resistant to scandals in crypto exchanges, and price dips could be interesting opportunities to buy the assets.
In the medium run, rising interest rates pause a higher risk to cryptocurrency valuations than another crypto-exchange scandal.