US stocks gain while Europe mixed; Another Oil inventory build

Summary:

• US stocks rise as traders await Powell speech

• Deutsche telekom wins approval for acquisition

• Trade of the day - W20

• Oil revisits recent lows on another inventory build

• Crypto bounces strongly despite Nigerian news

Despite the chances of a breakthrough on trade between Trump and Xi later this week looking increasingly unlikely, US markets seem to be in a fairly buoyant mood with gains seen across the board. In terms of economic release the economic growth numbers often attract a lot of attention but they aren’t usually that market moving for stocks. This afternoon we got the Q3 advance (second of three readings) US GDP which showed impressive growth of 3.5% - as expected. Looking ahead to the rest of the session the speech from Jerome Powell is a potentially big event with traders no doubt keen to see if the Fed chair reveals any insights ahead of next month’s FOMC meeting. Powell is set to speak at 5PM GMT.

In Europe things are a bit more mixed with the DE30 drifting a little lower after a bright start. Deutsche Telekom (DTE.DE) won an EU approval for its acquisition of a part of the Dutch Tele2 (TEL2B.SE). The German telecommunications firm will acquire mobile phone business of its Dutch counterpart. What is especially pleasing about the EU approval is that no conditions were attached to it. The European authorities said that the combined entity will hold around 30% of the Dutch market and the merger will not impact price or quality of services significantly. Deutsche Telekom shares have dropped by around 0.5% on the day.

Our trade of the day focuses on the W20 with the following reason supporting it. W20 was stronger than developed markets indices in last weeks. If the situation in the global markets calms down, the Polish stock market may be the main beneficiary of the future rebound. Futhermore, USDPLN is on very attractive level for foreigners investors which gives them opportunities to increase their profits. Today W20 breaks SMA200 on the daily chart which was the main resistance in last couple of weeks.

Oil bulls have had a testing time of late and they will have received little cheer from the latest US inventory data which showed a larger than expected rise. An increase of 3.6M barrels in the past week was above the +0.6M expected, and pretty much inline with last night’s API equivalent which showed +3.5M. The rise was a little smaller than the 4.9M seen last time out but it still makes it 10 increases in a row, showing there is quite clearly excess crude in the US at present. Longer term Oil remains in a clear downtrend with lows of 58.68 of utmost importance if a recovery can ensue. Should these levels hold then price will have to get above 61.78 before fib retracement of the decline can be targeted with the 23.6% at 65.30. A break below 58.68 would pave the way for another leg lower.

There’s been some strong gains seen in the cryptocurrency space today, with Bitcoin on course for its largest daily rise since April. The market leader in crypto is higher by more than 7% and has moved back above the $4000 level. On the news front a Nigerian commercial bank (Union Bank of Nigeria) headquartered in Lagos has threatened that it might shut down an undisclosed number of cryptocurrency-related account even without explanation. In its official statement it wrote that “In order to guarantee the security of our customers’ funds, Union Bank will monitor accounts being used for cryptocurrency transactions and may impose restrictions including closure of such accounts.” The 100-year old bank added that the steps it has taken does not meant that it necessarily suspects that some customers are violating anti-money laundering laws.