Our Market analysis: 13/05/2018

A week of positive confirmation for the equity markets, with a S & P500 index sharply up (+ 2.4%) a Nasdaq100 which continues its momentum with + 2.7% over the period while in Europe the Soxx600NR recorded a rise of + 1.6%, thanks to the oil and technology sectors and the strong dollar at 1.19.

China rebounds (CC1 : Amundi China ETF), weekly data

The week was punctuated mainly by the US exit from the nuclear deal with Iran and the renewed tension in the Middle East that ensued between Israel and Iran.

Oil progressed moderately this week, from + 1.4% for WTI to nearly $ 71 but there was not the expected outbreak because this event was strongly anticipated by the markets. On the other hand, oil is now installed in a long-term bullish trend with a first objective in the $ 80 zone. Beyond this price zone, the increase in oil will become negative for global growth, because it will weigh in particular on the Chinese, Indian and European economies. At first, this rise is positive for equity indices, as it brings about the rebound of the oil sector and certain industrial segments. The prolonged rise in crude prices will also end up having inflationary effects and negative effects on the transport sector.

Oil WTI more and more bullish (ETF Powershares DBO ), weekly data

The dollar remained firm against other currencies this week, as it plays the role of safe haven and the US economy is very exposed to the oil industry. US 10-year yields remained at a high level at 2.97, but the near-term momentum seems to be running out of steam.

The recovery of equity markets is clearly confirmed, but oil prices are to be monitored.