Oil falls further as stocks look to recover

Summary:

• OIL.WTI drops below $58 to 2018 low

• US stocks hold lows with Apple in focus

• Pound rises on Brexit hopes; UK employment mixed

• Ripple aims to overtake SWIFT as banks’ network of choice

• Top 3 charts this week: EURUSD, US500 and Oil

The large drop in oil has shown little sign of any let up this afternoon with another wave of selling hitting the markets. Both Brent and WTI are lower by more than 2% on the day and given the failure to hold onto gains yesterday on what was quite clearly positive news it doesn’t bode well going forward. It’s amazing how quickly sentiment can change in the markets with price hitting 4-year highs just over a month ago, but with Oil.WTI now in a bear market and barring an unlikely recovery into the close it is set to post a 12th consecutive red candle on the D1 chart.

The recovery seen in US stocks since last month’s low is facing its first real test after the markets came under some pretty heavy selling pressure yesterday. The S&P500 (US500 on xStation) suffered its largest decline of the month so and fell over 70 points from high to low. After an early foray lower buyers have stepped in and how the markets end today could be important going forward. Apple has fallen back to test the 195 breakout level which also coincides with the 200 day SMA. Previous dips to this SMA have represented good buying opportunities but a failure to find support here could spell trouble not just for Apple investors but also the broader US stock market.  

The Pound has gained late on this afternoon after reports were circulated that a draft Brexit agreement has been agreed upon with the understanding being that there is one overall backstop to avoid a hard border on the island or Ireland. This is yet to be confirmed and Irish PM Varadkar has declined to comment when asked but the markets are buying into it and reacting positively with the pound moving up to its highest level of the week and above the $1.30 mark once more.   The latest look at the UK labour market has delivered some good news for workers with wages rising faster than forecast even if the unemployment rate did tick higher. Average earnings excluding bonuses increased by 3.2% in September, the fastest pace of growth in a decade and comfortably above the corresponding level of inflation of 2.4% as taken from the Consumer Price Index (CPI). However, economic data has very much taken a backseat to politics in driving the pound at present.

Crypto markets are fairly mixed on the day with Bitcoin cash and Ripple two of the better performers. Brad Garlinghouse, Ripple Labs CEO, said in an interview with Bloomberg TV in Singapore that Ripple is aiming to overtake the Swift network, a system widely used by banks and others. “The technologies that banks use today that Swift developed decades ago really hasn’t evolved or kept up with the market”, remarked Garlinghouse, as reported Bloomberg. Let us recall that now there are over 100 banks and payments providers using the RippleNet network, as reported on Ripple Labs website.

Our top 3 charts this week focus on EURUSD, the US500 and Oil and can be viewed here.