Stocks rally after Midterms; Oil under pressure after another inventory build

Summary:

• Stocks react positively to US midterms

• USD falls back but recovers throughout the day

• 3 markets to watch going forward

• Oil remains under pressure after inventories

• BBVA conducts $150m blockchain-based syndicated loan

There’s gains seen across all major stock markets today following the outcome of the US midterm elections. A Democrat clean sweep (House and Senate) had been seen as unlikely but would’ve represented a potentially large negative shock to the markets and therefore avoiding this outcome can be seen as positive. Looking back to the end of the Second World War there has been a clear positive trend following midterm results with the S&P500 (US500 on xStation) higher on each of the 18 occasions. The US500 has pushed up to its highest level in almost 3 weeks today and the market is on course for a 6th gain in the past 7 sessions.

Turning our attention to the US dollar and it is apparent that the buck has dipped since the results became clear with only EM currencies faring worse. The declines are fairly measured but their breadth could be seen as telling and several pairs involving the USD are shaping up nicely. Arguably the market that is at the most interesting level is the EURUSD, with the most popular FX cross hitting a key fib retracement zone. Heading into the European close the buck has recovered somewhat with the EURUSD rejecting the aforementioned region.

As the dust settles on the results, here are 3 markets to watch going forward; EURUSD, NZDUSD and the US500.

What had looked like a promising move higher in oil earlier has fizzled out and the gains look like they could now be set to turn to losses after the latest  inventory release showed another increase in US stockpiles. The price had spiked nearly 200 ticks off its recent lows on reports that Saudi Arabia and Russia were discussing delivering further supply cuts next year, but the DOE inventory release which also showed record US production has nipped the recovery in the bud for now.  The daily chart for Oil shows price is not that far from the August lows around 70.40 and this could be seen as a key support. If the market continues lower and drops below there then price will reach its lowest level in over 6 months.

The capitalization of the whole cryptocurrency market stands a notch below the $220 billion handle while Bitcoin accounts for a 51.6% of the mentioned value. On the fundamental front, news from Spain where BBVA, the Spanish banking giant, and its two co-lenders, Mitsubishi UFJ Financial Group and BNP Paribas, have completed the blockchain-based syndicated loan worth $150 million for Red Eléctrica Corporación being the Spain’s electricity grid operator. Use of blockchain technology in a loan process is considered as one of the possible applications of this modern technology, because it may significantly reduce a time needed to give a loan.