Stocks and USD build on recent gains

Summary:

• Equities enjoy another solid move higher

• DE30: Lufthansa remained top European carrier in 2018

• USD remains supported despite ISM miss

• Pound falls as UK service sector teeters on contraction territory

• US SEC looks to better monitor blockchains

There’s been further gains seen in the US indices today with all the benchmarks building on recent gains. The US500, US30 and US100 have all hit 2-month highs in recent trade as they’ve moved up to levels not seen since the beginning of December. In Europe the DE30 has moved up near 11400 as it joins in the rally while you have to go all the way back to the middle of November to find a higher price for the FTSE!

Infineon Technologies (IFX.DE) published earnings report for the fourth quarter of 2018 today. The company managed to beat median revenue estimate of €1.915 billion by showing sales of €1.97 billion. EPS came in at €0.24 against expected €0.223. Executives of the tech stock also made some remarks on the upcoming financial year. The company expects 2019 revenue to reach lower end of forecasted range and to grow at the pace of 9% YoY under the assumption of stable EURUSD exchange rate of 1.15.

Moreover, the company plans to lower investments in 2019 to around €1.5 billion from €1.6-1.7 billion forecasted range. However, it remains committed to building a new part of the production plan in Villach. Lufthansa (LHA.DE) is also gaining today. Among reasons behind carriers good performance one can name report released by CAPA. According to the research, Lufthansa remained to be the European top airline by passenger staying ahead of Ryanair.

The latest data from the US services sector has come in below forecast, but on the whole the reading still suggests that the industry is holding up pretty well. The ISM non-manufacturing PMI dropped to 56.7, against an expected 57.1 and while this is the joint lowest since July 2018, it still remains firmly above the 50 mark. For comparison the UK equivalent dropped to 50.1 this morning while the Euro area wide figure came in at 51.2, so compared to these the US is still outperforming. The USD is gaining on balance today despite the slightly soft ISM data, with the largest gains seen against the pound.

The pound has fallen to its lowest level in a fortnight after a third consecutive data point from the UK in as many business days has flashed a warning sign on the economy. Following on from disappointing manufacturing and construction numbers, the latest purchasing managers index for the service sector, which due to its relative size is considered the most important of the 3, has fallen to its lowest level since July 2016 - the month after the EU referendum. The 50 mark denotes the line between contraction and expansion and the print for January of 50.1 is perilously close to falling into contractionary territory.

Crypto bulls and bears have not enough power to provide any stronger moves in recent days. Moreover, Tuesday seems to be another faint day for the cryptocurrency market as most of major cryptocurrencies have not experienced any major price moves. According to CoinMarketCap, the capitalization of the cryptocurrency market stands a little below the $114 billion handle whereas Bitcoin accounts for roughly 53.4% of this value. The US Securities and Exchanges Commission (US SEC) published a solicitation notice on Thursday, January 31.

The SEC writes that it is seeking companies which could deliver some data for “the most widely used blockchains ledgers based on transaction volume”, as the SEC’s announcement reports. In a notice, the American financial regulator describes that it wants to gather such information to “monitor risk and improve compliance”. Moreover, the SEC requires that companies will explain also a method of extraction of such data. What’s interesting, the regulator wants to get also a possibility to obtain an attribution data (as the documents explains, it means “to whom a particular address belongs”).