Indices test 2019 highs; Meaningful Brexit vote cancelled

Summary:

• Stock markets post new 2019 highs

• More selling seen in Boeing shares

• DE30: Official talks on German mega-merger confirmed

• UK house speaker rules against 3rd meaningful vote

• US SEC advisor think scrypto spring to come

Major equity indices like US500 and US100 have surged to the highest level in 2019 today as investors hope that the Fed will deliver a market-friendly message at its meeting this Wednesday (decision at 6pm GMT). The S&P500 (U500 on xStation) is back above the 2830 handle and trading within 4% of its all-time high.  

Boeing shares were making headlines for the wrong reasons last week, with sizable declines due to planes being grounded. The stock has begun this afternoon also lower, dropping more than 2% after the Wall Street Journal reported the Department of Transportation and federal prosecutors are scrutinising the development behind the planes involved - 737 Max models. The stock remains under pressure with price threatening to break below the 50% fib of the rally seen from last December’s low.

In Europe, FRA40 and DE30 are also close to 2019 high with DE30 eyeing an important resistance line of 11775 points.  What was rumoured and reported unofficially last week was confirmed past weekend. Deutsche Bank (DBK.DE) and Commerzbank (CBK.DE) will start formal talks over the potential merger. Germany holds noticeable stake at Commerzbank and is one of the most vivid advocates of the combination. Having such an ally is more than desired as the government may try to ease public  outrage that is likely to result from significant job cuts. One can expect more media coverage on the two banks in the nearby future. Both stocks are surging today. Merger of the Deutsche Bank and Commerzbank is an opportunity for other companies as well. There is a rumour that Deutsche Bank may need to divest stake in its asset management division, DWS Group, in order to finance a tie-up. Allianz (ALV.DE) already expressed interest in buying the asset manager. In the aftermath of a purchase Allianz would jump from #7 to #5 spot on the list of world’s biggest asset managers by AUM. However, the Deutsche Bank stayed reluctant towards selling DWS group earlier and may hold this line unless forced to do so.

Late this afternoon, the speaker of the House in the UK has announced that he will not accept a 3rd meaningful vote on PM May’s Brexit deal this week. John Bercow made the statement and stated that unless the proposal has substantially changed then it would be a waste of MPs time, in what comes as a blow for the government. The chances of May’s deal passing have now taken a sizable hit and it seems like the PM will seek a longer extension to Article 50 when she joins the EU summit later this week. The pound reacted negatively to the news, with the GBPUSD falling below the $1.32 handle in the initial reaction.

Major cryptocurrencies experienced some rises on Friday and Saturday. However, Sunday’s trading brought some downward price movements for major cryptos. Moreover, they have experienced slight losses also during the first hours of today’s trading. According to CoinMarketCap, the capitalization of the crypto market stands a little above the $139 billion handle whereas the largest digital currency Bitcoin accounts for roughly 50.8% of this value. The US Securities and Exchange Commission’s Senior Advisor for Digital Assets Valerie Szczepanik produced some remarks about cryptos during the SXSW conference in Austin, Texas. The SEC’s Senior Advisor remarked that she thinks “if we hope to smell the crypto spring in the air, it will take people walking with the regulators”. Moreover, Szczepanik said also that she thinks “the spring is going to come” in the topic of cryptos, as the Coindesk reports. Furthermore, the Senior Advisor for Digital Assets stated that the Commission has not produced clear regulations yet, because its approach is aimed to support innovations.