• US500 experiences sizable drop of 60 points in last 2 days
  • DE30 and UK100 also under pressure
  • Lower German inflation weighs on the Euro 
  • Bitcoin moves back down to 10k level
  • Trump’s State of the Union speech in focus overnight

It’s been another down day for stock markets, with the wave of selling which began yesterday growing in strength during today’s trade. The US500 dropped some 60 points from its all-time high at the start of the week to trade at 2820 this afternoon, but there has been an attempt at a recovery into the European close. 

Cash markets for European bourses have shown sizable declines with the DE30 falling ot a 2 week low below 13200 and the UK100 back at 7600 – the previous peak that the market made a strong break above in December. 

 Tuesday is important in terms of data releases from the EMU as we had reports on Q4 GDP for the block and flash inflation in Germany. When it comes to the GDP there were no surprises – growth came out at +2.7% y/y which means that bullish expectations have been met. However, inflation numbers – which seem to be especially important for the ECB at present – could be a drag on the euro. German flash inflation was at 1.6% y/y in January, below expectations (of 1.7%).

Bitcoin has dropped lower today, with the price falling back down near the 10k handle. Earlier we posted about the cryptocurrency and noted a technique used by some analysts to forecast the price. According to Nick Colas from Datatrek Research the key to unlocking a Bitcoin’s next rally is to observe Google search and the ensuing digital wallet creation as both successfully predicted future moves in the Bitcoin price.

Looking forward there could be a major event overnight with Trump set to deliver his State of the Union address. The State of the Union speech is an annual event delivered by the president to the joint session of the US congress. Although Trump had a similar speech last year it was not labelled “SotU” as the first speech does not count. In this context this is the first time for Trump and thus it is highly anticipated.