Summary:
- Stock markets drift lower after last week’s selling
- USD looking to build on last week’s gains; Aided by ISM beat
- Technical overview for DE30
- Oil threatens to join stocks in turning lower
- GBP also in decline after services PMI miss
- Bitcoin takes out last week’s low and falls to low $7000s
A wild rally on equities in January was capped in equally spectacular fashion last week. Following a record setting period without a correction on Wall Street we suddenly have one. The question is – is this the end of the bull market and if not, how deep the correction could be?
The main economic release of the afternoon has come in better than expected with the latest survey on the US services sector impressing. An ISM non-manufacturing PMI print of 59.9 was well above the 56.5 forecast and also the 55.9 prior.
As far as the DE30 is concerned it’s worth recalling that it broke a crucial support on last Thursday falling by 1.3%. Today the market has dropped lower further and the index is trading below 12650 on the European close. A technical overview of the market can be found here.
The strong moves lower in stock indices at the end of last week have threatened to sour risk sentiment in other asset classes with Friday’s session seeing a large decline in Oil. This created a rather ugly looking weekly candle which engulfed the prior week’s trade in its entirety. Today’s trade has seen Oil break the prior lows but it just about managed to hold key support around 67.60 at the time of writing.
UK services PMI unexpectedly slid from 54.2 to 53 in January while economists surveyed by Bloomberg had foreshadowed just a tiny decrease to 54.1. Taking into account other PMIs for the same period (manufacturing and construction) and underlining that the services sector is the most crucial one in the British economy one may argue that the BoE could have a hard nut to crack when it meets on Thursday.
After the abrupt rebound which came out of the blue on Friday’s afternoon Bitcoin has resumed its slide in early European trading. Whipping though business media outlets one may find the really interesting story concerning Lloyds Banking Group. Namely, the bank chose to ban its customers from buying Bitcoin and other virtual currencies via their credit cards.