MORNING ROLL CALL
SPX drops by 1.24%, U.S. dollar endures longest losing streak since November, whilst fund managers agree that U.S. equities are over valued
Well that escalated quickly, no sooner had analysts and market commentators pointed out that the main USA equity markets were approaching a record series of days for not falling by over 1% and they subsequently get slammed down. The SPX fell by 1.24% on Tuesday, the biggest drop since September; the index hadn’t fallen by over 1% for 109 days. Banks were the main fallers, the sector shedding 2.9% over the day, the biggest fall since June. However, it must be noted that before today’s sell off, the banking sector has enjoyed a circa 20% rally since the November election, with Goldman Sachs stock rising by circa 33%.
The reasons and theories for the market fall were numerous, everything from North Korea stepping up its nuclear programme, to Trump potentially struggling to get his various growth polices through Congress. Strangely, very few folk in the analyst community seemed to be saying; “er guys, just a thought, but perhaps it’s just a minor correction? After all, the markets have rallied in a hopium filled vacuum and bubble over recent months. A 20% rally, followed by a 1% fall, isn’t the end of days. Just sayin…”
Focusing on economic calendar events; the UK’s headline CPI inflation figure came in at 2.3%, annually, with RPI at 3.2%, with wage rises at circa 2.2% YoY, UK residents will be under pressure to thrive. Analysts and investors took this inflation news as evidence that the UK’s BoE MPC will be under pressure to raise the base interest rate at their next meeting, therefore, as a consequence of the inflation data, sterling rose sharply versus most of its peers, with the exception of GBP/JPY, were it fell in late New York session trading to 139.15. GBP/USD rose by over 1%, to finish the day at circa 1.2479.
In other UK news; house prices have slipped back to 6.2% YoY and the public sector net borrowing requirement came in at a £1.1b deficit for Feb, beating the forecast of £2.3b, potentially allowing the UK’s chancellor Hammond more wriggle room, in his attempts to balance the UK’s financial books.
Canadian retail data beat estimates, coming in up 2.2% for the month of Jan, ahead of the forecast of 1.3%. In the USA the current account balance coming in at -$112b, posted a far better quarterly figure, than the forecast of $129b.
The DJIA finally ended the day down 1.14%, NASDAQ down 1.83% as tech stocks sold off, as previously mentioned the SPX shed 1.24%. European equities also sold off; STOXX 50 closing down by 0.23%, FTSE down by 0.69%, DAX down by 0.75% and the CAC closing the day down 0.-9%, the French index not suffering as much, due to the centre left presidential candidate faring well in the live tv debate versus his extreme, right wing opponent, the previous evening.
The dollar fell versus the majority of its peers, USD/JPY ended the day at circa 111.58, USD/CHF at 0.9934, versus the Loonie the dollar rose in the New York session, USD/CAD ending the day at approx. 1.3357. With WTI falling by over 1% to $47.53 a barrel, commodity currencies such as the Cad Loonie suffered correlated falls. Gold rose once again to end the day at $1245 per ounce, with silver also rising to $17.514.
Economic calendar events for March 22nd, all times quoted are London (GMT) time
11:00, currency impacted USD. MBA Mortgage Applications (MAR 17). The previous reading was 3.1%, analysts will be looking for a similar reading as evidence that the USA mortgage market is still in rude health.
13:00, currency impacted USD. House Price Index (MoM) (JAN). The forecast is for the 0.4% increase in Dec. to be replicated in January. Any change on this could affect dollar sentiment.
14:00, currency impacted USD. Existing Home Sales (MoM) (FEB). The prediction is for a fall to -2.3% in Feb. from a 3.3% gain in Jan.
14:30, currency impacted USD. DOE U.S. Crude Oil Inventories (MAR 17th). With the oil price slumping over recent weeks, analysts and investors will watch this reading with interest to ascertain if the USA is stock-piling oil, a figure of -237k was the previous week’s reading.
