There is no dearth of problems in markets where sentiment is weak.
And the problems tend to come in an unexpected manner.
The latest one being the sudden large production cut of 1.1 million barrels per day announced by OPEC+
Source:- Twitter
Some observations
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This news may lead to short term spike in oil prices therefore creating a setback to cool down in inflation. But, generally, production cuts are considered as a sign of lower demand and therefore, it may also indicate a measure to lower volatility as far as oil producing nations are concerned.
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Oil going up necessarily may not be a bad thing as generally the correlation between equity and oil prices is positive. Both go up and down together most of the time.
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Considering the record lower Strategic petroleum reserves aka SPRs of US, this seems like a geopolitical move by OPEC+ in a bid to outwit US and taking the oil prices higher eventually.
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75 to 90$ range per barrel shouldn’t be a major issue for our markets in my assessment.
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But, it’s a tricky headache for western economies who are facing twin issues of inflation and banking crisis.
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Overall conclusion from my end is, very tough markets for positional setups. Intraday that too taking fewer trades and risking very little by employing lesser capital till there’s improvement in either news or stock prices. Let the dust settle.