Oil near 2019 highs after inventory draw; Further gains for Indices

Summary:

• Oil back near 2019 highs after inventory draw

• US stocks gain as volatility index falls to 5-month low

• DE30: Adidas dips after sales warning

• US SEC Chairman confirms Ethereum may not be security

• Brace for another Brexit vote

The main piece of data for Oil traders this week has delivered what is on balance a positive reading for the price of crude, and sent the market back up near its highest level of the year. The weekly EIA inventory release showed a drop of 3.9M, which was comfortably below the consensus forecast for a rise of 3.0M and marks a large drop on the +7.1M prior. Tuesday evening’s API number is often seen as the best gauge of market expectations, and with this coming in at -2.6M today’s more widely viewed release still appears favourable for bulls. Longer term the significance of the region around 67.80 is more readily apparent, with a move above there paving the way for a sizable gain. The longer term inverse S-H-S targeting 76.65 remains in play.

US stock markets have opened this afternoon in an upbeat fashion with all the main benchmarks trading in the green. Tech continues to perform well with the US100 leading the way while the US500 has moved back above the 2800 mark. Recent sessions have seen a strong bid underpin equities across the pond, and the US500 now looks to revisit key resistance in the region around 2824 once more.  The volatility index trades with an inverse relationship against the US500 and is seen by some as a leading indicator. This could be worthwhile noting now as this market (VOLX on xStation) has broken below recent support and trades at its lowest level since October - when the US500 made its record high. The VOLX is often referred to as a gauge of fear and the large drop indicates that the market is not at all worried at present.

European bourses are set for a day of gains but they continues to underperform their US peers. Adidas (ADS.DE) can be found among the biggest DAX laggards today. The German apparel company issued a weakish guidance for 2019. Namely, the shoemaker said that sales growth is likely to ease this year and may drop from 8% in 2018 to 5% in 2018. As a reason behind such lacklustre forecast the company cited fading boom for retro lines of shoes on the Old Continent. Adidas also announced €3.35 dividend payout for 2018, higher than analysts expected.

The cryptocurrency market has launched Wednesday’s trading quite flat as major virtual currencies have not produced any major price movements. However, it is worth noting that Dash went up to above the $90 mark during yesterday’s trading. According to CoinMarketCap, the capitalization of the whole cryptocurrency market stands around the $133 billion handle while the largest digital currency Bitcoin accounts for roughly 51.4% of this value at press time. The US Securities and Exchange Commission Chairman Jay Clayton has confirmed the agency’s analysis which said that Ethereum might not be a security. Namely, William Hinman, the SEC’s Director of Corporation Finance, stated last year that “current offers and sales of ether are not securities transactions”, but he also said that “the analysis of whether something is a security is not static and does not strictly inherent to the instrument”. The congressman Ted Budd sent a request to the SEC Chairman in which he asked whether Jay Clayton agrees with the Hintman’s analysis. The SEC Chairman has responded to a question from Budd recently. Jay Clayton explained in a letter that he agreed with the certain official’s remarks, but he did not mention Ethereum by its name. Clayton agreed that “analysis of whether a digital asset is offered or sold as a security is not static and does not strictly in here to the instrument”.

Vote on no-deal Brexit (evening, probably around 7:00 pm GMT)

In line with expectations the UK parliament rejected revised Brexit deal yesterday evening. Scale of defeat was smaller than during the first vote on 15 January but a difference of almost 150 between numbers of backers and opposers gives Theresa May little reasons to cheer. The parliament will decide today whether to leave the European Union without a deal or not. It is widely anticipated that no-deal Brexit will be put off the table today, a move that would pave the way for extending Article 50. Theresa May pledged to do whatever parliament decides therefore should the UK lawmakers back no-deal exit from EU, a significant pressure on the GBP may surface.