US stocks attempt to break higher; GBP set for large weekly gain

Summary:

• US indices near 5-month highs after mixed data

• Tesla falls as Model Y unveiled

• SEC sues Volkswagen over misleading investors

• Pound set for solid weekly gains despite tumultuous politics

• CBOE won’t add Bitcoin futures this month

The final session of what has been a good week for US stocks has begun on the front foot with the markets rallying higher from the opening bell. As has been the case in recent sessions, the US100 is leading the way and the market has just notched up its highest level since October 2018. Thursday’s trade saw a small pullback but after beginning on Monday around the 7000 mark it’s been pretty much one way traffic, and the US100 has gained almost 5% since!

In terms of individual stocks there’s been quite a drop in Tesla with the electric carmaker lower by more than 4% not long into the session. The declines come as the firm introduced its latest vehicle, ther Model Y, which is a crossover SUV and cost between $39,000-60,000. The Model Y is about 10 percent bigger than the Model 3, seats seven, features a panoramic glass roof and 66 cubic feet of cargo space, Tesla CEO Elon Musk said, showing off a Model Y prototype at the Tesla Design Center in Hawthorne, California on Thursday night.

The US Securities and Exchange Commission decided to sue Volkswagen (VOW.DE) over misleading investors. The US watchdog claims that Volkswagen deceived investors when selling corporate bonds in 2010-2015 period by not disclosing the fact that its cars do not meet emission standards. While SEC was investigating Volkswagen since 2017, the latest announcement hints that enforcement action may take place.

As we approach the end of what has been a busy and head-spinning week on Brexit it's worthwhile taking a step back to summarise. A series of votes have seen parliament reject PM May's deal and a no-deal Brexit before agreeing on an extension to Article 50. Another meaningful vote on May’s deal is scheduled for next Wednesday (20th March) - if it is passed the UK will seek an Article 50 extension to June 30th, if it is rejected once more then the UK will seek a longer extension (somewhere in the region of 1 year+). So what does this all mean for the pound? Broadly speaking it's good news. The worst case scenario (no-deal Brexit) now looks highly unlikely, which means that either May's deal is passed or an even softer version is pursued during the longer extension. GBP is higher against all its major peers on the week, gaining the most against the JPY (2.2%) and also set for sizable gains against the USD (+1.7%). Predicting what will happen next for Brexit has proven to be something of a fool’s errand ever since the referendum, but if forced to take this risk and make a forecast then the most likely outcome appears to remain May’s deal passing (just) and a short extension of the Article 50 deadline.  

Thursday’s trading produced a quite mixed picture of the cryptocurrency market. The largest virtual currency Bitcoin managed to reach a gain, but Ripple dropped slightly. However, major digital currencies have moved slightly higher during the first part of Friday’s trading. According to CoinMarketCap, the capitalization of the whole cryptocurrency market stands a little below the $167 billion handle whereas the market capitalization of virtual currencies excluding Bitcoin sits a little above the $67 billion mark at press time. The Cboe Futures Exchange (CFE) announced yesterday that it would not add new Bitcoin futures in March 2019. The CFE “is assessing its approach with respect to how it plans to continue to offer digital asset derivatives for trading”, as the CFE’s release says. While the company does not want to add new future it also said that currently listed Bitcoin futures contracts would remain available for trading.