Mixed day for stocks as attention turns to the Fed

Summary:

• Indices mixed after recent gains

• Stock of the week: Walt Disney

• Where next for NZDUSD after recent events?

• Texas takes action against possible crypto bubbles

• Fed set to announce latest policy at 7PM GMT

 

Wednesday was a great day for US stock market bulls, with the S&P500 (US500 on xStation) posting its 2nd largest post-midterm election day gain of all time. So far today the overall trade has been a bit mixed with the US30 moving up to its highest level of the week while the US500 and US100 have remained inside Wednesday’s range. In Europe there’s been a bit of selling with the DE30 failing to build on recent gains and slipping back near the 11500 level.  

 

Walt Disney (DIS.US) is a company that needs no introduction. Perhaps everybody knows who Mickey Mouse is. However, the company is set to expand its franchise portfolio in a multi-billion dollar deal. With conditional approval received from one of the major antitrust agencies on Tuesday the deal is getting closer to be concluded. In this analysis we will look at the details of this big acquisition as well as its impact on company's business.

 

The Antipodean currencies have suffered heavily from the trade dispute between the United States and China. The Australian dollar has lost 7.4% whereas the New Zealand’s dollar has fallen virtually 6% since the beginning of the year. There is no doubt that both currencies have strong links with the China’s economy but the NZ dollar is also burdened with some unfavourable domestic factors unlike the Aussie. Therefore, having to choose between them we would bet against the NZD. The NZDUSD has bounced back sharply and the move has been additionally boosted by the astonishing jobs report for the third quarter. However, sticking to the proverb that one swallow doesn’t make spring we think that the ongoing rally could run into some obstacles relatively soon and is strongly dependent on further developments regarding the trade war.

 

It looks set to be another day of selling in the crypto space with nearly all the markets in the red at the time of writing. The Texas State Securities Board informed earlier this weeks that it issued an emergency cease and desist order to an Australia-based cryptocurrency mining company and its affiliates. The regulator said that the crypto company offers so-called “guaranteed 200% profit” suggesting that each crypto mining power contract guarantees such the gain. It wrote in a statement that “The investments in the cryptocurrency mining program are ‘securities’ - Respondents are engaging in fraud in connection with the offer for sale of securities - and are making offers containing statements that are materially misleading or otherwise likely to deceive the public.”

7:00 pm GMT - FOMC interest rate decision. When it comes to today’s FOMC meeting no one expects change in the monetary policy settings. As no press conference is scheduled after the meeting the attention will be solely drawn to the statement released along with the decision. What will be the point of interest in the statement? Any remarks on the pace of further rate hikes. Somewhat lacklustre price growth figures seen in the latest GDP report may have raised some concerns whether current pace is reasonable. While it is unlikely the pressures exerted by the US officials (mostly Trump) may have also took their toll.