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Bitcoin rally pushes other digital currencies higher - EMEA Brief 03 Apr

Guest DanielaIG


  • The price of Bitcoin jumped 23% on Tuesday, surpassing the $5,000 line and hitting its highest level in almost 5 months in just under an hour. This sudden surge caught investors off guard as Cryptocurrencies' volatile sessions, which were popular at the beginning of last year, have now become a rare occasion.  The trigger of this rally is unknown, which is common with unregulated assets, but other digital currencies followed suit, as Ethereum surged 12% and Ripple gained 6.5%.
  • The US and China are believed to have resolved most of their issues regarding their trade dispute as they are set to resume talks this weeks to try and figure out how to implement and enforce their agreement. The potential end to the trade disputes comes as figures released by the Asian Development Bank (ADB) show that Chinese investment in Asian developing countries tripled last year.
  • As a result of the trade talk progress, Asian shares were trading higher on Wednesday, as Shanghai, Kospi, Nikkei  and Hang Seng Composites, were all trading 1% higher whilst the Shenzhen Composite  was trading  0.5% higher. European equity futures point to a higher open on Wednesday.
  • The S&P 500 closed flat on Tuesday as previous gains were capped by a drop in consumer staples and telecoms. The Nasdaq was up by 0.3% whilst the Dow Jones was down  by that same margin.
  • Oil prices were up to new highs nearing $70 per barrel as concerns about supply continue, with Brent up 0.52% to $69.73 and Crude up 0.37% to $62.81 per barrel.
  • Brexit tensions resumed on Tuesday as Theresa May offered to work with Labour leader Jeremy Corbyn to ensure support for her deal, sparking outrage amongst the Conservatives, with some of its members branding the move as collaborating with "a known Marxist". As a result of Mrs May's attempt to try and resolve the political deadlock, Sterling was up 0.1% against the dollar.

Asian overnight: Asian markets have seen widespread gains after a report from the FT was released that stated that almost every issue had been resolved in US-China trade talks, with the only sticking point coming on how the deal will be implemented and enforced. Talks between the two sides continue today in Washington, with further progress likely. The Chinese PMI recovery continued this morning, with the Caixin services PMI jumping from 51.1 to 54.4; the highest level in over a year. Elsewhere, Australian retail sales and trade balance both improved markedly, providing a boost for the Australian dollar.

UK, US and Europe: British Prime Minister Theresa May is expected to ask the EU for another short extension as she tries to work out her deal with opposition leader Jeremy Corbyn. This move has upset hardline Tory Brexiteers as Mr. Corbyn wants to implement a Customs Unions, which would keep the UK tied in with the EU in the future.

Looking ahead, a busy day sees the all-important UK services PMI reading released in the morning, with eurozone retail sales following shortly after. In the US we have the ADP payrolls figure and ISM non-manufacturing PMI reading, with the day finishing off with the release of the latest US crude inventories.

Economic calendar - key events and forecast (times in GMT)

2019-04-03 08_49_34-Forex Economic Calendar.png

Source: Daily FX Economic Calendar

9.30am – UK services PMI (March): index expected to weaken to 51 from 51.3. Markets to watch: GBP crosses
10am – eurozone retail sales (February): sales expected to fall by 0.6% MoM. Markets to watch: EUR crosses
1.15pm – US ADP employment report (March): 165K jobs expected to have been created, down from 183K last month. Markets to watch: US indices, USD crosses
3pm – US ISM non-mfg PMI (March): index to fall to 58.7 from 59.7. Markets to watch: US indices, USD crosses
3.30pm – US EIA crude inventories (w/e 29 March): stockpiles expected to fall by 2.7 million barrels. Markets to watch: Brent, WTI

Corporate News, Upgrades and Downgrades

  • Stagecoach said that strong trading and progress in its UK rail business had lifte performance, and as a result it expects an improvement in its earnings per share for the year to 27 April 2019.
  • Topps Tiles reported a 0.2% rise in like-for-like revenues for the 26 weeks to 30 March 2019. However total revenues for the period were £108.8 million, down from the £109.4 million of a year earlier.
  • AA suffered a 62% fall in pre-tax profit for the year to 31 January, to £53 million, but revenue rose 2% to £979 million.

Generali upgraded to buy at Nord/LB
Just Group upgraded to neutral at JPMorgan
Panalpina upgraded to sector perform at RBC

Anima downgraded to neutral at Citi
Ferrexpo cut to neutral at JPMorgan
Halma downgraded to hold at Jefferies

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