Today, the AEX was unable to continue the positive momentum of the past few days. While the stock market index regained the level of 1,000 points this week, that symbolic limit has now been lost again. This of course has everything to do with the uncertainty surrounding the conflict in the Middle East, and in particular the resulting oil price.
Furthermore, today’s focus is on the American consumer price index for February, although its value is not yet certain, because oil prices have since changed significantly.
AEX charts remain positive
For the time being, the graphs continue to provide a positive picture of the price development of the AEX. It usually becomes dangerous when the 10-week price average (orange) dips below the 50-week average (blue). In 2022, that marked the start of the bear market.
At the moment we see the AEX mainly fighting to stay above the 10-week average at 1,000.97 points. Yet it is also difficult to draw conclusions from price movements within a graph at times of war.
Especially because in the case of the Iran war it is still quite unclear how long the conflict will last. Donald Trump hopes for a quick settlement, but of course no one has that certainty.
Oil prices creep back to $90 per barrel
The oil price is now creeping towards the USD 90 per barrel mark again, while investors continue to closely monitor developments surrounding the war between the United States and Iran. On Wednesday morning, Brent crude was trading at almost $90, despite reports that the International Energy Agency (IEA) may be considering the largest release of strategic oil reserves ever.
Normally, additional supply from emergency supplies would push prices down, but the market seems mainly focused on the uncertainty around the Strait of Hormuz. This strait is crucial for global energy supplies, because a significant part of global oil trade passes through it. Due to military tensions and disruptions in shipping, fears persist that supplies will be restricted for a long time.
The duration of the conflict in particular determines further price movements. If tensions ease quickly, the oil price could give up some ground again. However, if the disruption continues, analysts do not rule out new increases towards $100 or even higher.
A structurally higher oil price remains a risk for the global economy and the AEX. More expensive energy can fuel inflation, put pressure on consumers’ purchasing power and force central banks to remain cautious about interest rate cuts for longer.
For that reason, it remains to be seen whether this afternoon’s inflation report can move the financial markets. This will only be the case if the conflict in Iran also comes to an end in the short term.
Source: https://newsbit.nl/aex-koers-onderuit-en-verliest-1-000-puntengrens-opnieuw/
