MORNING ROLL CALL
USA equity markets suffer biggest sell off since the November election, European markets slump, whilst the dollar comes under pressure
Markets hate uncertainty and political instability always adds fuel to that uncertainty, it took less than ten days since his inauguration, for the political hacks’ knives in the USA to begin sharpening for president Trump. Whilst the corporate optimism, which greeted both his election win and subsequent Whitehouse residency, appears to be have taken a handbrake turn. Perhaps reality is finally setting in now the hysteria is fading and there has been evidence of what many analysts are terming a “reality gap”.
There’s a marked difference between current USA sentiment indices, often regarded as leading indicators, which are roaring ahead and many data releases, which are suggesting that the USA economy isn’t in great shape. This disconnect may correct over the coming months and lead to a market correction. Or alternatively, according to a report from the respected Barron’s publication over the weekend, the DJIA will hit 30,000 before the end of 2020, on the back of unprecedented homespun fiscal stimulus from the Trump administration.
The DJIA was off by 135 points at 9:00pm UK time on Monday, whilst the SPX was down 16.60 or 0.72%. European markets had set the tone in the morning trading session with all the major indices selling off, many by their largest single day fall in 2017. The UK’s FTSE 100 closed down 0.92%, Germany’s DAX by 1.12%, France’s CAC by 1.14% and Italy’s MIB by a substantial 2.95%. The STOXX 50 was down by 1.23% at the close.
The Dollar Spot Index fell by 0.4% on Monday, the 2017 loss is now over 2%. Sterling suffered a sell off during Monday’s sessions with many sterling pairs crashing through S3; GBP/USD finished the day at circa 1.2485 and this despite the dollar’s value doing under pressure across the board versus all of its major peers. GBP/CHF also sold off sharply; down to 1.24218. GBP/JBY slumped sharply, at the end of the trading day it was at circa 142.03. Sterling investors have a weather eye focused on the upcoming parliamentary debates concerning the UK’s article 50 remit. The pound also lost ground versus the euro, EUR/GBP towards the end of the day was trading at circa 0.85654.
Yen enjoyed a rally versus its peers during Monday’s trading sessions, climbing by circa 1.4% versus the dollar, USD/JPY rose through R3 at 113.76, EUR/JPY fell through S3 to reach 121.66 near the close of Monday’s trading.
West Texas Intermediate crude lost over 1% to $52.01 a barrel. Gold’s safe haven appeal saw it rise by circa 0.5% to $1,1995 an ounce.
Economic calendar events for Tuesday January 31st, all times quoted are London times.
08:55, currency effected EUR. German Unemployment Rate s.a. (JAN). The expectation is for Germany’s unemployment rate to have remained static at 6.0%, naturally any deviation from this prediction could impact on the euro’s value.
10:00, currency effected EUR. Euro-Zone Unemployment Rate (DEC). The current Eurozone rate is 9.8% and the anticipation is that this figure will be replicated when the latest data is published on Tuesday morning.
10:00, currency effected EUR. Euro-Zone Gross Domestic Product s.a. (YoY). The annualised GDP rate for the Eurozone’s economy is not expected to have changed, from the current level of 1.7%. Analysts will be monitoring the data to ascertain if there’s any signs of a weakening economy in Europe’s trading bloc region.
10:00, currency effected EUR. Euro-Zone Consumer Price Index Estimate (YoY) (JAN). Inflation leapt by circa 0.6% in the preceding month to 1.1%, the prediction from the economists polled is that inflation in the Eurozone will have risen to 1.5%. This metric should be watched carefully over the coming months, as should it reach 2% then the ECB may consider scaling back its asset purchase scheme and or raising the base rate, from its current floor.
13:30, currency effected CAD. Gross Domestic Product (YoY) (NOV). The expectation is that Canada’s GDP will have slipped marginally, down to 1.4%, from 1.5% previously.
15:00, currency effected USD. Consumer Confidence (JAN). USA consumers are enjoying a bounce, in terms of overall confidence lately. Spending is up, borrowing likewise. Analysts expect a reading of 112.9, from 113.7 previously.
