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Market Review 13-03

Market Review 13-03

Forex News

Pound edges up after May’s Brexit defeat, more volatility expected

From: Reuters.com

The pound edged up on Wednesday after turbulence following the defeat of British Prime Minister Theresa May’s European Union exit deal, but investors braced for more volatility ahead of additional Brexit proceedings.

The British Parliament on Tuesday rejected May’s deal to quit the European Union for a second time, deepening the country’s political crisis days before the planned departure date on March 29.

Lawmakers will now vote later on Wednesday on whether Britain should quit the world’s biggest trading bloc without a deal. If such a “no-deal” exit plan is rejected, another vote will be held on Thursday on whether to extend the March 29 departure date.

“The parliament is likely to reject a ‘no-deal Brexit’ plan, and the March 29 exit date subsequently being extended now looks to be a distinct possibility. The pound is thus stabilising on such expectations for now,” said Takuya Kanda, general manager at Gaitame.Com Research Institute.

“Considering how sensitive the pound is to headlines, we could see the currency gyrate again if the door is opened for an extension of the March 29 exit deadline.”

Sterling was up 0.2 percent at $1.3089 and stuck to a narrow range. The currency had lost 0.65 percent the previous day, when it fluctuated widely between $1.3290 and $1.3005.

“Even if Britain decides to extend the Brexit deadline, the question will shift quickly to the length of the extension it desires and what it plans to accomplish within that period,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust.

“Without an acceptable plan, Britain might have a difficult time convincing European leaders at the EU summit next week, forcing market participants to reverse their positions on the pound and again exposing the currency to sudden downturns.”

The EU’s 28 government leaders will decide at a March 21-22 summit whether to extend the negotiating period beyond the current exit date on March 29.

The dollar was on the back foot after data on Tuesday showed U.S. consumer prices rose at a slower-than-expected pace, nudging Treasury yields to two-month lows.

The dollar index against a basket of six major currencies was little changed at 96.992 after losing 0.3 percent overnight.

The euro was a touch lower at $1.1283 after rising 0.4 percent the previous day as the greenback sagged on the lacklustre U.S. inflation data.

The dollar inched down 0.1 percent to 111.21 yen, reversing the previous day’s modest gains.

The Australian dollar slipped 0.35 percent to $0.7056 after a gauge of local consumer confidence slumped to its lowest in over a year in March.

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USD/JPY recovers early lost ground but lacks strong follow-through

From: FXstreet.com

  • A modest uptick in the US bond yields helped revive the USD demand
  • The prevalent cautious mood underpins JPY and seemed to cap gains
  • Traders now eye US durable goods order data for some fresh impetus

The USD/JPY pair managed to recover a major part of its early decline, albeit remained well within the previous session’s trading range.

With investors looking past Tuesday’s softer US consumer inflation figures, a modest rebound in the US Treasury bond yields helped revive the US Dollar demand and turned out to be one of the key factors lending some support to the major.

However, the prevalent cautions mood, as depicted by a weaker tone around equity markets, underpinned the Japanese Yen’s safe-haven demand and seemed to keep a lid on any meaningful up-move for the major, at least for the time being.

It would now be interesting to see if the pair is able to attract any follow-through buying interest or continues with its struggle to make it through the very important 200-day SMA barrier as market participants now look forward to the US macro data for some fresh impetus.

Today’s US economic docket highlights the release of durable goods orders data, which coupled with PPI figures might influence the USD price dynamics and eventually produce some short-term trading opportunities later during the early North-America session.

Technical outlook

Omkar Godbole, FXStreet’s own Analyst and Editor writes: “A break below 111.11 would revive the bearish view put forward by the rising wedge breakdown on the hourly chart. The pair could then challenge the previous week’s low of 110.75. On the higher side, 111.46 – the high of the rising wedge – needs to be breached to strengthen the bull grip.”

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Stock Market News

S&P 500 Ends Higher as Tech Tees up Gains

From: Investing.com

The S&P closed higher Tuesday as tech stocks continued to rack up gains, offsetting ongoing weakness from Boeing.

The S&P 500 gained 0.3%, while the Nasdaq Composite gained 0.44%. The Dow Jones Industrial Average fell 0.38%, mainly due to Boeing’s slump.

Tech stocks extended their gains from a day earlier, led by Apple, up 1.1% on the day.

Apple (NASDAQ:AAPL) is reportedly set to unveil its video streaming service to rival Netflix and Disney and a streaming news subscription service at an event scheduled for March 25 at its Cupertino, Calif. headquarters.

Apple’s video streaming service could reach 100 million subscriptions in three to five years, bringing $7 billion to $10 billion in annual revenue over time, Wedbush Securities said in a note.

The broader tech market was also propped up by gains in semiconductor stocks thanks to Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD).

Boeing (NYSE:BA), meanwhile, added to losses from a day earlier, following reports that more countries had grounded the aircraft maker’s 737 Max 8 planes. Its shares fell 6.15% and are off 11.15% since Friday.

American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV), both of which use Boeing’s 737 Max airplanes in the their fleet, fell more than 2%.

On the trade front, U.S. trade representative Robert Lighthizer said the U.S. and China were in the “final weeks” of trade talks, but he admitted that a successful outcome is not assured.

Gains in retailers, meanwhile, were stifled by a slump in Dick’s Sporting Goods (NYSE:DKS) as the retailer’s downbeat outlook and weak margin growth offset better-than-expected fourth-quarter results. Shares fell 11%.

In other corporate news, Tesla (NASDAQ:TSLA) fell 2.6%, adding to losses from a day earlier as Morgan Stanley said it sees “an air pocket in demand that is coming earlier than we expected.” The bank cut its price target on Tesla to $260 from $283.

On the economic front, tame U.S. inflation data added to investor expectations the Federal Reserve will continue to hold off raising interest rates, supporting sentiment on stocks.

In geopolitical news, U.K. lawmakers rejected Prime Minister Theresa May’s renegotiated Brexit withdrawal agreement by a resounding majority.

But the result had a somewhat muted impact on stocks as it was widely expected after Attorney General Geoffrey Cox warned early Tuesday that the risk of the U.K. being trapped in a backstop arrangement, to avoid a hard Irish border after Brexit, remained “unchanged.”

Top S&P 500 Gainers and Losers Today:

Devon Energy (NYSE:DVN), Whirlpool (NYSE:WHR) and Newmont Mining (NYSE:NEM) were among the top S&P 500 gainers for the session.

F5 Networks NASDAQ:FFIV), Boeing (NYSE:BA) and American Airlines (NASDAQ:AAL) were among the worst S&P 500 performers of the session.

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UK needs to meet Facebook, Google competition with new rules: report

From: Reuters.com

Britain needs to overhaul its competition rules to tackle the dominance of tech giants like Facebook, Google and Amazon, and increase consumer choice, a government review said on Wednesday.

A new competition unit with expertise in the sector should be set up, the independent review said, and innovation should be encouraged by giving people control over their own data so they could switch between rival services and platforms easily.

Smaller companies should also have access to the data that social media platforms hold on their users, it recommended.

Big tech has been criticized by politicians in the United States and in Europe in recent years over issues ranging from Facebook losing track of users’ data to how Google ranks the results of searches.

France, Italy, Britain and Spain have also proposed new digital taxes to narrow loopholes that allow large multinational firms to cut tax bills.

Harvard professor Jason Furman, who chaired the British government review, said the digital sector had created substantial benefits but they had come at the cost of the increasing dominance of a few companies.

“My panel is outlining a balanced proposal to give people more control over their data, give small businesses more of a chance to enter and thrive, and create more predictability for the large digital companies,” he said on Wednesday.

“These recommendations will deliver an economic boost driven by UK tech start-ups and innovation that will give consumers greater choice and protection.”

UK finance minister Philip Hammond, who will deliver a half-yearly update on the budget later on Wednesday, said he would set out government measures to ensure digital markets are competitive later this year.

TechUK, which represents more than 900 tech companies that collectively employ 700,000 people, said the report contained some positive suggestions, but it needed further detail on what any proposed code of conduct for big tech might look like.

It also said there had to be a full assessment of the risks and benefits of opening up data sets.

“Bad regulation can be as big a barrier to competition and innovation as monopolistic activities,” TechUK CEO Julian David said.

“The UK must remain a welcoming place for digital business from around the world, and ensure that the UK competition and wider regulatory framework is not in conflict with the other leading digital economies with which we must compete.”

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Cryptocurrency News

Key Indicators Show Bitcoin Price Could be Losing Steam

From: Cointelegraph.com

Key price movement indicators show that Bitcoin (BTC) could be heading for another move downward, according to a recent report from Bloomberg on March 12.

The report states, “Technical gauges signaling long-term buying demand for Bitcoin are deteriorating” and as such, buying pressure could increase. Bloomberg notes that the seminal crypto’s Moving Average Convergence Divergence (MACD) indicator has been moving downward since mid-February.

The MACD is a trend-following indicator of momentum that shows the relationship between two moving averages of the price of a security.

Bitcoin has tested the $4,000 mark several times in previous weeks, but has as of yet been unable to break above it for a meaningful period of time. Bloomberg states that, until Bitcoin can break through that level, it is likely to face selling pressure. Bloomberg analyst Mike McGlone said:

“The entire industry is ripe to resume a path to lower prices. Conditions are akin to November [2018], just prior to the collapse. Prices are consolidating within narrowing ranges, with a few sharp bear-market rallies that appear fleeting.”

Other industry experts have suggested that investors are forgoing Bitcoin to move their money into altcoins. EToro senior market analyst Mati Greenspan said:

“It’s just that investors are seeing more potential in some of the smaller tokens at the moment. As we approach the culmination of the crypto winter, we’re actually seeing some of the altcoins delivering spectacular gains in the last few weeks. We are now in what industry insiders like to call alt-season.”

At press time, data from TradingView shows that the Bitcoin MACD is at 44.3, pointing to a “sell” recommendation. The coin is currently trading at $3,910.57, up a modest 0.48 percent on the day according to CoinMarketCap.

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