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A new Bitcoin April Short Squeeze- EMEA Brief 04 Apr

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  • Bitcoin’s chart is finally generating some interest in technical traders as prices are slightly down from Wednesday’s record highs. April last year saw a “short squeeze” that had the price of Bitcoin jump from $6,700 to $8,000 in a single move. Other cryptocurrencies are following the trend as investors look for the drivers in the volatility surge.
  • Gold prices edged higher after steadying on Wednesday. The yellow-metal keeps rotating around the mean as the effect of the rally in global stocks balances out the recent dip of the dollar. Spot contracts hit $1292.46 at 6:00am GMT on the IG Web Trading Platform. 
  • Palladium slumped 2% on Wednesday on concerns that the recent equity rally might be drying up. The use of the metal in industries such as automotive, chemical and electronic appliances provide for a high correlation with global growth. Interestingly, the price of the precious commodity is also bonded to the economic situation of Russia, which provides slightly over 40% of the global supply. Slowing global economy could drown the metal, which hit a record $1409.2 at 6:00am GMT on the IG Web Trading Platform. 
  • Oil seems to have steadied after its sustained one-week growth. West Texas Intermediate was trading at $62.40 as of 7am GMT. Crude is rallying faster than analyst expected and this is pushing gasoline prices up as well, with May futures up about 5% from last week at 7am GMT.
  • The US dollar weakened against emerging markets currencies on the possibility of improvement of the US-China trade relationship. The Australian dollar is off to a mildly positive start against USD after the rebound that followed stronger-than-expected retail trade figures on Wednesday.
  • Trading in Asian equities was mixed as investors wait for developments on US-China trade deal. The worst performer was Australia’s S&P/ASX 200 Index which dropped 0.9% while the Shanghai Composite Index climbed 0.6%. Treasuries yields retained their recent gains with Australia’s 10-year yield ticking up about 5 basis points to 1.89%.

Asian overnight: Asia-Pacific markets exhibited a distinct lack of direction overnight, with the session proving largely forgettable given the lack of major news. Chinese stocks were the biggest mover, with the Shenzhen composite rising once again in a week that has seen a widespread boost to the nation's PMI surveys.

UK, US and Europe: The European and US sessions look similarly quiet, with ECB meeting minutes providing the one event of note. In the UK, we saw parliament pass a bill to seek an extension to article 50, with talks between Theresa May and Jeremy Corbyn expected to continue through the week. 

Risk sentiment this week was helped by media reports touting progress in Sino-U.S. trade talks. Bloomberg reported on Thursday the U.S. wanted to set a 2025 target for China to meet trade pledges. The plan would see China committing to buy more U.S. commodities, including soybeans and energy products, and allow full foreign ownership for U.S. companies operating in China as a binding pledge.

Overnight, Wall Street edged higher to extend a strong start to the quarter as a rally among chipmaker shares provided a boost to the broader market. The Dow rose 0.15 percent, while the S&P 500 gained 0.21 percent and the Nasdaq 0.6 percent.

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

Econ Cal 4 Apr.PNG

Source: Daily FX Economic Calendar

3pm – Canada Ivey PMI (March): expected to fall to 50.4 from 50.6. Markets to watch: CAD crosses

Corporate News, Upgrades and Downgrades

  • Mothercare said that like-for-like sales in the UK fell 8.8% in the three months to 30 March 2019, but this was an improvement on the previous two quarters. Full-year guidance remains unchanged. 
  • Electrocomponents expects to deliver strong adjusted pre-tax profit growth thanks to good performance in the fourth quarter. 
  • Saga suffered a 5.4% fall in underlying pre-tax profit for the year to 31 January, to £180.3 million, as retail broking and underwriting activity both fell. The dividend was cut from 9p to 4p. 

Acciona upgraded to buy at AlphaValue
Chr. Hansen upgraded to hold at DNB Markets
Polytec Holding upgraded to hold at Erste Group
UDG upgraded to overweight at Barclay

Casino downgraded to underweight at Morgan Stanley
Intrum downgraded to hold at SEB Equities
Stagecoach downgraded to hold at Liberum
Sage downgraded to neutral at Cit

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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.  

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