US Data in Focus as Stocks Recover

Futures Stage Small Recovery After Another Rough Week

Equity markets in Europe are continuing to stage a small recovery on Thursday and US futures are seeing a similar improvement, following what has been a tough week for stocks, particularly in the tech sector.

Trade war fears may be gradually easing with the US and China showing an interest in finding a solution to the dispute but those concerns have simply been transferred to the tech sector, with the Facebook scandal raising significant questions about regulation in the industry. As of yet, only Facebook has been caught up in the scandal and if that remains the case, the sell-off may be short-lived.

Dow (US30) Daily Chart

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However, as we’ve seen with scandals in other industries – banks and automakers for example – these cases quite often aren’t unique. Should this turn out to be the case, the sector could come under further pressure and given its size, that could easily drag the rest of the market with it, as we’ve seen recently. With the Dow back in correction territory, markets still look vulnerable to more losses.

Dollar Holds Gains as Trade War Fears Recede

Inflation, Income and Spending Figures Eyed

On a brighter note, the economy is continuing to perform strongly, as noted by yesterday upward revision to fourth quarter GDP. With tax reform providing an additional tailwind for the economy, the numbers in the coming months will be extremely interesting and could force the Federal Reserve into action more than it is currently planning.

Its macro-economic projections last week already included upward revisions to growth and inflation expectations and included an extra rate hike next year than was previously forecast. I don’t think it would take much for that to be brought forward to this year, particularly if inflation and wages pick up more than is currently expected. The inflation, income and spending data today will therefore be of particular interest, particularly the former as it’s the Fed’s preferred measure.

Another 48 hours

Cryptocurrencies Tumble Again as Social Media Companies Fight Back

It’s been another bad day for cryptocurrencies, with bitcoin slipping another 5% to trade near the lows hit a couple of weeks ago. Not too long ago it was the prospect of heavy-handed regulation or outright bans that was rocking the cryptocurrency market, now it’s social media and other internet platforms banning advertising that’s weighing on prices.

Bitcoin (CME) Daily Chart

Source – Thomson Reuters Eikon

It seems that a lack of understanding about how to manage the situation and prevent fraudsters from gaining access to the public is encouraging these platforms to impose blanket bans in some cases in order to avoid being associated with them. At some point I imagine that will change and only those that are untrustworthy will be targeted but for now, the news is delivering another blow to the industry and dragging down prices, although compared to the start of last year, for example, they’re still very elevated.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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