Stocks and Oil hold near recent highs despite soft data

Summary:

• Equity indices remain near 2019 highs

• Nike shares slide on shoe malfunction

• Oil still near recent peak despite record US production

• EURGBP falls to 3-week low after PMI data

• Crypto: Samsung unveils private key storage

The start of this year has been spectacular for stocks around the globe with US indices fully recovering from the December plunge and bourses everywhere from China to Germany seeing major advances. While investors reacted positively the U-turn in the Fed policy, there are more factors in play for stocks. We present them in this analysis.

In terms of individual stocks, Nike could be worth keeping an eye on this with shares in the sportswear giant lower by more than 1.5% after a college basketball player suffered an injury due to his Nike trainer splitting. Zion Williamson’s shoe ripped into pieces less than one minute into the game between Duke University and the University of North Carolina, causing the player to fall and injure his knee which kept him out the rest of the game. "We are obviously concerned and want to wish Zion a speedy recovery. The quality and performance of our products are of utmost importance," Nike said in a statement. "While this is an isolated occurrence, we are working to identify the issue." This clearly doesn’t look good for Nike with Williamson seen as one of the best players at college level and it’s also worth pointing out that the stock of Under Armour, one of Nike’s main competitors are up by around 1.4% at the time of writing.

The weekly crude Oil inventories have been released 1 day and half an hour later than usual this time out due to the US bank holiday for Presidents day on Monday and shown a fifth consecutive build. There was more bad news for Oil bulls, with US production increasing to its highest level on record in coming in at 12M bpd. This rise in production has been one of the biggest themes on the supply side of the market in recent years and it’s showing little sign of letting up. The Shale oil revolution has been behind this major increase, and even the sharp drop seen in the oil price in 2014/15 seemingly only provided a temporary pause in what has been a strong and clear uptrend that shows little sign of ending anytime soon. Having said that  The big picture for Oil remains fairly constructive from a technical point of view, even if the fundamentals both in terms of supply and the global economy appear less supportive. The inverse head and shoulders mentioned previously remains valid above the 63.65 level and for the time being most indicators point to the market being in an uptrend.

The release this morning of a batch of industry surveys from across the Eurozone have served to further reinforce the notion that economic activity in the bloc is slowing, with the manufacturing sector a particular cause for concern. A Euro area-wide manufacturing PMI slid below the 50 mark for the first time since the June 2013 release and in doing so signals a contraction in the index. The reading of 49.2 was below the 50.3 expected and extends a remarkable run of 7 consecutive misses for this data-point and means that 12 of the last 14 have been lower than economists’ forecasts. Unsurprisingly this has led to some selling in the single currency with the Euro falling to its lowest level of the month against the pound.

The cryptocurrency market has begun Thursday’s trading taking a step back. Bitcoin has dropped after several days of recent price rises. Moreover, Ethereum and Ripple have experienced some losses during Thursday so far. According to CoinMarketCap, the capitalization of cryptos stands a little above the $133 billion handle while the capitalization of altcoins sitting around the $64 billion mark. Samsung, the South Korea-based tech giant, unveiled its new top smartphone called Samsung Galaxy S10 during the yesterday’s conference. Samsung confirmed that Galaxy S10 would allow to store private keys for blockchain mobile services, as the company’s press release said. Crypto rumors connected to the new Samsung’s smartphone appeared some time ago, but the yesterday’s event confirmed them. Nevertheless, the question whether the South Korean giant has created its own full-scale wallet or it has provided only support for crypto private key storage has yet to be explained.