European open – US tariffs, gold, oil

Investors buoyed by possible US concessions

European stocks are slightly in the green again on Tuesday as the positive trade headlines continue to flow and investors prepare for a bumper festive season.

Source – Thomson Reuters Eikon

Overnight reports that the US is preparing to offer to remove $112 billion of Chinese tariffs in order to get a deal over the line on phase one, a clear sign that Trump is keen to get a win after years of talk. It also shows that this deal isn’t going to be as one-way as was initially sold.

Regardless, as far as investors are concerned, it’s a massive win and further alleviates recession fears that gripped the markets earlier this year. If the two sides can get this deal over the line in the coming weeks, the Santa rally may well come early this year.

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Gold stumbles again but bullish pressures building

Gold has stumbled once again just as it looked poised to test its October highs around $1,520, leaving us in consolidation mode. Still, pressures are building from below so just because the breakout is taking its time, it still looks increasingly likely to come to the upside.

A firmer dollar at the start of the week naturally didn’t help matters and took some of the wind out of gold’s sails. The greenback has been softer over the last month though as sentiment and trade headlines have improved.

Gold Daily Chart

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Oil buoyed by trade hopes

Oil prices are certainly benefiting from the bounce we’re seeing in sentiment. These trade headlines are a huge positive for oil prices, which have been weighed down by global growth downgrades and recession fears. While the global economy is hardly out of the woods, a slowdown is far more tolerable.

Brent has broken above $62 in recent days after rebounding off $59 last week. The next test of resistance above may come around $64, which has previously been a notable area of support and resistance. Ultimately, the sustainability of this rally will depend on the growth outlook which will undoubtedly improve if this trade deal gets over the line.

Brent Daily Chart

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