Market Update by Solidecn.com

[Solid ECN]

US100 gains over 1%


China's tech sector rebound fuels gains on Nasdaq


US100 futures are gaining, as a higher opening in Asia and euphoria on Alibaba shares have improved sentiment around the technology sector. Analysts have been very wary of Chinese tech stocks in recent years, fearing direct government intervention in their business and margins. So far, however, China is positioning itself as a free-market economy, allowing it to compete with the United States. A few months ago, representatives of Chinese authorities at the Davos Economic Forum asserted that, contrary to Western fears, the country does not intend to centralize power and completely subordinate the financial market party. In addition, reports from the Washington Post indicated that President Joe Biden is expected to present new banking regulations. The White House was prompted to create them by the SVB bankruptcy. The Nasdaq is attempting to close the quarter with its best performance since 2020, and after several weeks of turmoil in the banking sector, investors appear 'jaded' by news of the prospect of a crisis. US bank valuations are still far from a meaningful upward correction and Joe Biden has warned that the banking crisis is far from over, against which buyers have shifted from the 'risky' financial sector to the technology market.


Another supportive factor for US equities is the sharply losing VIX index, which is seen by investors as a barometer of market fear. Compiled by the CBOE, the index extends a 1.5-week-long downward impulse.





The US100 index is trying to maintain the bullish momentum initiated 2 weeks ago, and the declining VIX may support the buyers' side even now. However, it is worth watching tomorrow and Friday's session, when we will know many interesting macro readings from the US economy.

[Solid ECN]

Ripple


Cryptocurrencies are rebounding today despite the still-uncertain news about the conflict between the CFTC and the Binance exchange. Among all the projects, Ripple (XRP) stands out again. Fintech company Ripple will hold a closed-door consultation with the Securities and Exchange Commission (SEC) on March 30. The market took the news of the warring parties meeting in court as a signal of a potential settlement. Bringing it about would be a victory for the entire decentralized finance sector in the States. It would undermine the SEC's decision-making role and reduce the fear of the prospect of restrictions proposed by Gary Gensler.


Ripple is cited by many analysts as one of the future foundations of a digital financial infrastructure based on blockchain technology. For example, recently Ripple's blockchain was able to process a $755 million transaction, in 4 seconds, for a fee of tenths of a dollar (0.01 XRP). By the crypto market, the company is seen as a major competitor to the interbank market, which charges high commissions for processing international transfers;
Iron Key Capital analysts point to Ripple as a winner in the multi-billion dollar global payments market. In addition to Ripple itself, cryptocurrencies Stellar and Algorand are also gaining today. Both of them, along with Ripple, have been pointed out as being integrated into the new ISO20022 international settlement standard. This system will replace the SWIFT standard in the coming years. Ripple's victory with the SEC is expected by Ark Invest fund manager CathieWood, among others;
The next few weeks may bring a 'rally under the event' in the price of Ripple tokens. A similar course of events is characteristic of the crypto market at the same time as it often ends in a sell-off (profit realization, so-called 'fact selling', as the decisive moment is very close. This was the case, among others, with the price of Cardano, which implemented smart contract technology in September 2021, and Ethereum Merge, in the summer of 2022.





The largest holders of Ripple so called 'whales' have increased their buying activity in view of the upcoming SEC decision.





Ripple chart, D1 interval. The price has overcome the key resistance near $0.55, set by previous price reactions. The chart, which resembles a technical saucer formation, may indicate a more permanent reversal of the downward trend.

[Solid ECN]

CHNCComp - Chart of the Day

HSCEI (CHNComp) was one of the best performing Asian indices during today's Asia-Pacific trading session. The index jumped over 2% today and painted a daily peak at 3-week high. Improved sentiment towards Chinese shares can be reasoned with recent performance of Alibaba (BABA.US) as the index and the stock are highly correlated. According to a Bloomberg report, Alibaba aims to divide the company into 6 different entities with each being responsible for its own financing and decisions like going public. This news triggered an over-14% increase in Alibaba's share price yesterday.



Taking a look at CHNComp chart at D1 interval, we can see that while the index managed to climb above the price zone ranging between 6,600 pts mark and 200-session moving average (purple line), it was later halted at 50-session moving average (green line) in the 7,000 pts area. What comes next will be crucial from a technical point of view. An inverse head and shoulders pattern can be spotted building up on the chart - a bullish pattern. However, a pullback towards the aforementioned 6,600 pts area would be needed for the pattern to take shape.

[Solid ECN]

AUDUSD

• US indices finished yesterday's trading slightly lower. S&P 500 dropped 0.16%, Dow Jones moved 0.12% lower and Nasdaq plunged 0.45%. Small-cap Russell 2000 index dropped 0.06%
• Indices from Asia-Pacific are trading higher today. Nikkei gained 1.1%, S&P/ASX 200 traded 0.2% higher, Kospi traded flat and Nifty 50 gained 0.1%. Indices from China traded 0.1-0.2% higher while Hong Kong's Hang Seng gains over 2%
• DAX futures point to a slightly higher opening of the European cash session today
• US Energy Secretary Granholm said that refilling of strategic petroleum reserve may start this year
• Shinichi Uchida, deputy governor of Bank of Japan, said that if 10-year Japanese yield climbs to 2%, BoJ will experience an unrealized loss of 50 trillion JPY on its bond portfolio (currently 10-year yield sits at 0.3%)
• United States said that China shouldn't overreact to Taiwan president's visit to the United States. This comes after China warned that meeting between US officials and Taiwan president would be seen as provocation
• Lee Bokhyun, head of South Korean financial regulator, said that South Korean authorities will consider lifting the short-selling ban this year. Ban was imposed early in the Covid pandemic
• Australian CPI inflation decelerated from 7.4 to 6.8% YoY in February (exp. 7.4% YoY). Core inflation dropped from 7.6% in January to 6.9% YoY in February
• API report pointed to a 6.08 million barrel draw in US oil inventories (exp. +0.2 mb)
• Cryptocurrencies trade higher - Bitcoin gains 1.3%, Ethereum adds 1.1% and Dogecoin jumps 2.4%
• Energy commodities trade mixed - oil gains slightly while US natural gas prices drop
• Precious metals pull back amid USD strengthening - gold drops 0.5%, silver trades 0.7% down and platinum dips 0.6%
• NZD and USD are the best performing major currencies while JPY and AUD lag the most

AUD is pulling back after a lower-than-expected CPI reading for February. AUDUSD failed to break above the 0.6710 resistance zone and is now pulling back towards the 200-hour moving average (purple line).

[Solid ECN]

USDCAD

USDCAD finally managed to break below the key short-term support at 1.3655. According to the Overbalance methodology, this may point to a change of the main sentiment to bearish. The level of 1.3655 should be treated as the first line of resistance. In turn, nearest support to watch can be found around 1.3535 and 1.3475 levels.

[Solid ECN]

FRA40 pulls back as investors continue to follow the banking turmoil

FRA40 and other major European indices gave back most of early gains in the afternoon amid renewed concerns over the European banking sector. French prosecutors raided five banks including Societe Generale, BNP Paribas and HSBC as part of an investigation into suspected cases of tax fraud and money laundering related to dividend payments. Meanwhile, protests against the pension reform continue and strikes entered a 10th day on Tuesday, with public transport disrupted and deliveries halted. From a technical point of view, the French index pulled back as buyers failed to break above 50 SMA (green line) around 7180 pts. If sellers manage to uphold control, downward move may deepen towards upward trendline or even crucial support zone in the region 6550 pts - 6650 pts, which is marked with lower limit of the 1:1 structure, 200 SMA (red line) and 23.6% Fibonacci retracement of the upward wave launched in March 2020.

[Solid ECN]

USD unimpressed by Consumer Confidence data

US Consumer Confidence Index rose to 104.2 from 102.9 in March (revised to 103.4). Today’s reading came in above analysts’ estimates of 101.

• Present situation index 151.1 vs 153 prior
• Expectations index 73.0 vs 69.7 prior
• 1 year inflation 6.3% vs 6.3% prior
• Jobs hard-to-get 10.3 vs 10.5 prior
• 14.9% expect their incomes to increase, up from 14.4% last month

​




Conference Board Confidence index moved higher in March, however inflation expectations still remain high, which is not what FED would like to see.

Simultaneously, Richmond manufacturing index for March was released. The index unexpectedly fell less than expected to -5 from-16 in February, while analysts’ expected -10.0 pointing to a modest improvement in business conditions. Of its three component indexes, shipments saw the largest change (up to 2 in March from -15 in February) and both the employment (-5 vs -7) and new orders (-11 vs -24) indexes improved but remained in negative territory. Firms continued to report easing of supply chain constraints as the indexes for backlogs and lead times remained negative. The average growth rate of prices paid decreased moderately, while the average growth rate of prices received changed little in March. Firms remained pessimistic about local business conditions and the index for future local business conditions edged down slightly.



EURUSD saw relatively small reaction to today’s data releases. The most popular currency pair continued to trade around 1.0820 level.

[Solid ECN]

GBPUSD

Andrew Bailey, governor of the Bank of England, as well as two other BoE members (Sam Woods and Dave Ramsden) appeared before the Treasury Select Committee today for a hearing on Silicon Valley Bank collapse. Bailey noted that collapse of SVB was the fastest banking failure since Barings Bank failure, which collapsed in 1995 following massive 827 million GBP loss incurred by trader Nick Leeson. However, those two cases cannot be compared as Barings failed due to rogue trader actions while SVB collapsed due to bank run and poor interest rate risk management. Speaking on Credit Suisse, Bailey said that problems of Swiss bank were company-specific and should not be seen as a risk for domestic banks. Overall, Bailey said that does not think that any of the features of recent banking failings (SVB and CS) are causing stress in the UK financial system. He said, however, that we are in a period of heightened tensions in the markets and higher levels of alertness are needed.



Bailey's comments today were in-line with his remarks yesterday, when he noted that UK rate setters are unlikely to be distracted from fighting inflation by troubles of the global banking system. GBP saw some weakness following Bailey's comments today but the move immediately after remarks was barely noticeable. Taking a look at GBPUSD chart at D1 interval, we can see that the pair has reached the resistance zone marked with 50% retracement of the downward move launched in June 2021. Pair attempted to break above it last week but failed and today's attempt also looks to be under question. GBPUSD erased gains from earlier today, painting a long upper wick on D1 interval. However, should we see a break above this zone, the 1.2440 area, marked with local highs from previous months, could be the next target for buyers. On the other hand, failure to break above could see the price pull back towards the support zone marked with 38.2% retracement and 200-session moving average (purple line).

[Solid ECN]

BTC Retests 9-Month Highs

Cryptocurrencies are gaining along with the major indices on Wall Street. Concerns about the banking crisis have eased somewhat, with investors finally taking a positive view of Fed Chairman Powell's comments yesterday. The rally continues despite news of an investigation into Justin Sun, the creator of the Tron blockchain, and subsequent fines targeting celebrities who promoted his cryptocurrency. The largest crypto exchange in the US, Coinbase (COIN.US), has received a so-called Wells notice evidencing possible enforcement and irregularities identified by the SEC regarding the assets and services offered on the platform.

• The SEC maintains that all cryptocurrencies except Bitcoin are securities, while the Coinbase exchange has announced a confrontation with the regulator in court. At the time of Binance US's acquisition of the assets of bankrupt Voyager, a judge dismissed the SEC's request to halt the transaction;
• He pointed to the unclear regulation of the industry and the incompatibility of the SEC and CFTC regulators towards what cryptocurrencies de facto are. The industry read the position as a possible preliminary precedent for wins against the SEC in other court cases. However, the bullish sentiment faded somewhat after a broader announcement from the US Securities Exchange Commission, which warned against the crypto market;
• SEC maintains that entities that offer cryptocurrency trading may not be operating in accordance with US law. Despite these comments, shares of the Coinbase (COIN.US) exchange managed to erase some of the losses, although still losing nearly 11%. A general increase in risk appetite is supporting the quotations of the largest cryptocurrency.

Bitcoin, M30 interval. The price of the main cryptocurrency rebounded from the 23.6 Fibonacci retracement of the upward wave started on 10 March and the SMA100 and SMA200 averages. It has thus resumed the bullish momentum and is testing the previous resistance near 28,500 USD. Overcoming 28,800 USD could open the way for the bulls to rally towards 30,000 USD.

[Solid ECN]

US30

The dynamic declines on Wall Street initiated during the latter part of today's session were abruptly reversed by US Treasury Secretary Janet Yellen, who stated that she would provide additional deposit support if needed. Yellen added that anti-contagion tools may be applied again. Strong actions are to be taken to ensure deposits are safe. Stock indices rebounded dynamically after the new statement.