Chevron Corp. fell by 1%, while declines in Shell Plc and BP Plc weighed on the European stock market. This followed a loss in oil's earlier gains prompted by news of Saudi Arabia reducing supply.
Summer often brings cautious trading. Major policy shifts from regulators are unlikely. However, the Federal Reserve's June pause—or a last-minute cancellation—could catch the market off guard. After resolving the US debt ceiling issue, bonds appear more attractive.
Meanwhile, the euro weakened, and German bonds increased on Tuesday following the European Central Bank's announcement that consumer inflation expectations in the eurozone fell significantly in April. Yesterday, ECB President Christine Lagarde made it clear that she plans to continue raising interest rates. In the commodities market, wheat prices jumped after the Kakhovka Hydro Power Plant was blown, posing a potential threat to Black Sea grain reserves. Prices increased by 3.6%, continuing their climb from a 30-month low last week.
The Australian dollar sustained its climb after the RBA left the door open for further interest rate hikes, sparking a rally in the national currency. Asian stocks rose to a three-month high, buoyed by a rally in Chinese tech companies amid rumors Beijing will take steps to bolster the economy.
As for the S&P 500 index, demand has slightly softened, but there is still potential for an uptrend. Bulls should reach $4,250, from which a surge to $4,290 may occur. Bulls also need to control $4,320, reinforcing a bull market. If the index declines due to a diminishing risk appetite and hawkish remarks from Fed officials, bulls need to protect $4,255 and $4,230. Breaking through these levels, the index may return to $4,175 and $4,143.
