Stocks make soft start to the week; UK PM May sets date for key Brexit vote

Summary:

• US500 drops back below 2600 as stocks remain under pressure

• DE30: hurdles arise in Volkswagen-Ford talks

• GBP little changed despite UK PM May setting date for Brexit vote

• Cryptocurrencies gain as EU parliament calls to increase Blockchain usage

• Silver - fundamental outlook for 2019

While the US500 just about managed to avoid its lowest weekly close of the year, the market is clearly back under pressure. Price has dropped to an 8-month low at 2568 but buyers have stepped in and stemmed the declines for now. The region from here down to the February lows of 2530 could be seen as key support and a break below would open up the potential for a larger decline.

The DE30 in Europe also recovered from its lows but trades down by around 0.5% on the cash close. According to Handelsblatt, the German business newspaper, talks on potential cooperation between Volkswagen (VOW3.DE) and Ford (F.US) stumbled on Monday. Argo, autonomous driving unit of Ford, turned out to be a bone of contention. Namely, Volkswagen would like to take a stake in Argo but price offered by Ford is said to be too high. In turn, the German company had to cancel supervisory board meeting scheduled for Thursday at which Herbert Diess, CEO and Chairman of Volkswagen, was to submit cooperation plans. Nevertheless, Volkswagen said that the talks with Ford are on the right track and that it should not come as a surprise that some hurdles arise at the final stage of negotiations. The German company hopes they will be resolved shortly.

Politics in the UK remains the biggest driver of the pound as the Brexit saga wrangles on and today there’s been more developments on this front with PM Theresa May setting a date for a vote on her Brexit deal. According to her statement Parliament will vote on the deal sometime during the third week in January, which begins on the 14th. The decision to make this announcement has seemingly outmaneuvered the opposition, with the Labour party leader Jeremy Corbyn reportedly preparing to call a motion of no confidence in her if she failed to announce a date today.  There’s been little reaction to the day’s Brexit news in the GBPUSD market, with the pair remaining in a downtrend according to the 8 and 21 EMAs. 1.2700 could be seen as important resistance while 1.2475 may offer support below.  

It’s been a good day for cryptocurrencies as they look to recover some of their recent declines. The capitalization of the whole market stands around the $104 billion mark. The European Parliament, being the parliamentary institution of the European Union, adopted blockchain-related resolution on Thursday titled “Blockchain: a forward-looking trade policy”. In the document the EU Parliament encourages to increase blockchain adoption in trade and business. The EU’s legislative body mentioned in the resolution that blockchain adoption could improve supply chain transparency, streamline trade processes, reduce costs and corruption, detect tax evasion and the security of data.

Silver and gold are perceived as safe haven assets. Both commodities tend to move in the same direction in the long-term. Silver may benefit from calmness across markets on the back of a different demand profile. Speculative positioning suggests that silver remains oversold. Based on some technical patterns one may expect a rise in silver prices at least by $1.4 per ounce. Nonetheless, if the Fed turns out to be more dovish, it could push silver prices yet higher. Therefore, we recommend to go long at a market price with a stop order at $13.75 and a target at $15.65 and $17.