Financial market research and analysis

The price of Bitcoin got a boost from payment company Square buying $50 million in BTC, the Turkish lira dropped and the Dow Jones finished at its highest in a month.

Markets

US indices turned briefly lower when House Speaker Nancy Pelosi rejected the idea of an airlines-specific stimulus package suggested by President Trump. The President back-tracking from his call on Tuesday to end all chances for pre-election stimulus appears to be keeping a floor under prices.

The Russel 2000 was leader again among the US benchmarks in a sign that investors are rotating into companies set to benefit most from stimulus - notably airlines.

European stocks rose on Thursday for a second day, reaching the highest since September 21, a near 3-week high. The energy sector was a rare leader thanks to a 3% gain in the price of oil. The gains in Europe are on shaky ground though, given the big rise in coronavirus cases in hotspots like Paris, where hospitals have been put on an emergency footing.

Bitcoin pops on new Square bought $50M BTC

Payment company Square headed by Twitter founder Jack Dorsey said it bought a large block of 4,709 bitcoins. That adds up to $50 million and is about 1% of Square’s assets. Dorsey is known to believe that Bitcoin will one day become the world’s single currency. It would appear Square believes Bitcoin will feature somehow in its future as a payment company- and is positioning for it now. Cryptocurrency trading is notoriously susceptible to influencers advocating it. This purchase from Square could make sure 10,000 remains a floor to the price.

Turkish lira record low

The lira slumped to a new all-time low on Thursday on the rising chance that Turkey could be put under US sanctions. The latest trigger was the planned test of the Russian S-400 missile defence system bought despite opposition from fellow NATO members. Turkey has also been involved in several regional conflicts - most recently between Armenia and Azerbaijan. At the same time the country faces double digit inflation. The record lows in the currency come even as the CBRT hiked rates by 200 basis points last month. We don’t’ see how with so many political risks and a politicised central bank that the currency can reverse its downtrend.

Day Ahead

On Friday, October 9^th the day ahead includes:

China Caixin PMI

UK Trade balance, industrial production

Canadian unemployment

JD Wetherspoons quarterly earnings