Crude Oil is climbing this morning with WTI up 2.5% and Brent up 2.4% as investors applaud news out of a weekend OPEC meeting that Saudi Arabia has voluntarily and unilaterally decided to cut its production by 1 million barrels per day in July. Despite the rally, WTI remains below $75.00/bbl and Brent remains below $80.00/bbl, suggesting that while Saudi Arabia remains committed to managing supply as a big swing producer to support prices, concerns about demand may continue to overhang the market.
Service PMI reports have been rolling out overnight and into this morning. Australia, Spain and the UK beat expectations. Most continental European countries disappointed slightly but remained above 50 in expansion territory. US ISM Non-Manufacturing PMI is due at 10:00 am EDT (street 51.5), along with US Factory orders (street 0.5%).
With the US debt ceiling crisis out of the way and earnings season over, focus turns back to monetary policy this week. The Reserve Bank of Australia meets Tuesday, followed by the Bank of Canada on Wednesday. Both banks are expected to hold rates, potentially setting the stage for the Fed to pause its rate hike program later this month. Investors may also look to statements and press conferences for hints about the state of their economies, inflation and future interest rate trends.
While the FTSE is up 0.5% on the UK PMI news, US index futures and the Dax are essentially flat as investors digest last week’s equity market gains. Metals action is mixed with Platinum up 0.8%, Copper up 0.2%, Gold down 0.5% and Silver down 0.8%. Cryptocurrencies are also struggling with Bitcoin down 1.7% and Ethereum down 2.0%.
