US stocks attempt to break higher; European economic growth slows

Summary:

• US stocks attempt to break higher

• FTSE back near 7000 handle after Fed boost

• European economic growth slows in 2018

• Indian government works on crypto regulation

The markets were clearly positioning themselves for a dovish Fed meeting last night, with stocks rallying higher ahead of the announcement, and Powell & Co didn’t disappoint with the Fed chair stating the bank were “patient” on rates while also considering reducing the pace of the quantitative tightening programme, QT. Equities surged on the news and built on their earlier gains with the US500 breaking above 2676 and in doing so breaching the upper bound of the markets recent range. There are several reasons remaining that suggest this rally won’t last - which we’ll come on to in a moment - but whilst the markets remains above 2676 on a daily closing basis, the outlook continues to favour the bulls in the near term.

There’s been more upside seen in UK stocks this morning, with the FTSE 100 coming close to moving back above the 7000 handle with the market reacting favourably to the latest Fed decision.  One of the worst performing blue-chips today is BT, with shares in the telecoms firm declining by over 3% and residing near the foot of the FTSE leaderboard. Both the top and bottom line were slightly better than many had forecast, but they still both declined with a 3% drop in core earnings year-on-year one the main negatives. Arguably the brightest note came from the rise in BT’s consumer unit, which recorded a 15% increase in core profits to £648m while revenue came in at £2.78B - a 4% gain. Outgoing CEO Gavin Patterson was upbeat in his future outlook for the firm claiming that despite the declines, BT is on track to post underlying profits near the top end of its guidance for the current financial year of around £7.4B.

The German retail sales report for December was released at 7:00 am GMT. Data can be named disappointing to say the least. Volume of sales at retail level declined by 4.3% MoM, the weakest reading since at least the turn of millenia. What is even more grim is that is figure does not include auto sales. Apart from that, the GDP report for the final quarter of 2018 from EMU was released at 10:00 am GMT. Growth figures came in line with estimates on both, annual and monthly basis. Growth slowed to 1.2% YoY confirming that the European economy is indeed slowing.

Today’s trading on the cryptocurrency market hasn’t brought any notable moves on major virtual currencies. However, it’s worth paying some attention to Ripple as it drew the bullish candlestick at the important technical level on Wednesday. India the country’s government invited lawyers from Nishith Desai Associates to present suggestions concerning crypto regulations. Note that the company submitted to the government a possible regulatory framework for cryptocurrencies a month ago. One of the three authors of the proposal said earlier this week that “The government is not legally bound to respond to or accept suggestions from the public.” He also added that “Our submission was responded to by the Finance Ministry which was kind enough to invite us to present our suggestions. The presentation mainly consisted of us explaining the suggestions made in the paper … They listened to our proposals with interest.” The report outlines, among others, a number of ways to license cryptocurrency businesses. The suggestions made by the govt included avoiding prohibition, taking a balanced approach and self-regulation for the industry.