Monday’s trading sessions, across Europe and in the USA, saw equities move ahead, with the DJIA and S&P printing record highs, primarily driven by energy, financial and commodity stocks, financial shares have enjoyed spectacular gains since the last recorded high by the S&P index; rising by 14 percent since August 15th.
For the first time since 1999 all four of the USA major indices printed record highs. If an election is, as former president Bill Clinton once remarked, “all about the economy stupid” then Wall Street has much to cheer, only two weeks after the election of Donald Trump was predicted to cause a market crash. And it must be noted that we’re still several weeks away from the anticipated, traditional Santa rally.
The S&P 500 Index rose 0.8 percent to 2,198.19 at 4 pm New York time, to print its latest recorded high since August 15th. The Dow Jones Industrial Average advanced 88.62 points to 18,956.55 to print a new high, the Russell 2000 Index has enjoyed its longest rally since 2003, whilst the Nasdaq added 0.9 percent, to also reach its highest level ever.
It’s often debatable what represents a high impact fundamental news events, or data release. Many sources would downgrade certain medium impact events to low impact, or upgrade medium to high. Certain medium impact events can in fact have tremendous impact once released, depending on the prevailing market conditions and wider macro economic situation at any given time. With the subject of Brexit becoming a long standing issue in the UK and its ramifications on the performance of: UK equities, indices and sterling, any medium impact news event concerning the UK should be monitored carefully until and after the UK finally invokes article 50 in the first quarter of 2017, before preparing for a full exit up to two years thereafter. Which, judging by the language emanating from many European ministers, will not be the benign, or “soft exit” many UK government officials are craving.
Mid morning on Tuesday at 9.30 am, during the London-European trading session, the latest UK borrowing figures will be released. The previous monthly borrowing figure was £10.1 billion, the expectation is for a figure for October closer to £5 billion. Any divergence from this prediction could cause movements in both UK indices and sterling. A figure close to that prediction would offer further evidence that any economic impact, after the referendum vote, has been negligible. Similarly the CBI forecast (the confederation of British industry) publishes its orders trends survey. At -17 last month the expectation is for a reduction to -8. Robust orders would suggest that UK based manufacturers and producers are not feeling any ill effects of the referendum decision, yet. Moreover, it would also reinforce the belief that the UK economy is in good shape, after the encouraging 7% retail sales growth in the UK (year on year) according to official ONS data, released last week.
Retail sales figures for Canada are released at 1.30 pm GMT (London time). After a fall of 0.1% last month the figure is expected to show a 0.6% return to growth. Consumer confidence data for Europe will be released at 3.00 pm, the prediction is for the reading to remain the same at -8. Data concerning existing home sales for the USA is also released at 3.00 pm. Analysts polled expect sales to have shown zero growth at 5.47 million units a year, from a position of a 3.2% increase in October.
In the overnight session Japan’s indices fell as a consequence of an earthquake which was recorded as 7.4 and relatively shallow at only 10KM depth. Despite taking place in the same area as the devastating 2011 quake and once again close to the Fukushima nuclear facility, there have fortunately been no reports of deaths, or significant tsunamis beyond the potential three metre rise potentially indicated.
Yen rose versus it’s major peers early in the overnight trading session, whilst the main Japanese indices fell. The TOPIX traded down 0.3% with the Nikkei down 0.11% at 18095, having fallen to a low of circa 18000 on the futures market, as the earthquake hit.
The main Australian index rose 0.92% shortly after open reaching 5,400, with the Aussie currency correspondingly enjoying gains versus it’s major peers, rising to 0.73813 versus the USD in early trading, moving away from the daily pivot and threatening the first line of resistance, R1.
Having experienced whipsaw activity during Monday’s trading sessions the Euro started the overnight session in positive territory versus the USD. Rising to an early session high of 1.06504. Sterling continued to make gains early in the overnight session after enjoying a significant recovery during Monday’s trading sessions, when traders pushed up its value versus all of its major peers. Cable (GBP/USD) rose from the daily pivot point early in the Tuesday session, to reach 1.25122.
WTI oil has continued its recovery. After falling to circa $43 per barrel last week, it breached $48 per barrel early in the overnight session on the futures market. Having endured a significant sell off in last week’s trading sessions gold has recovered some lost ground over the past 24 hours, since reaching a recent low of circa $1200 on the 18th of November. Price recovered to $1219 in early trading.