MORNING ROLL CALL
On Tuesday, for the second day in succession, all four major USA indices reached and closed at record highs. The DJIA stole the headlines, as the index finally breached the psychological barrier of 19,000, having first rejected the level earlier in the New York trading session. The S&P rose by 0.2 percent to 2,202.94. The Russell 2000 gained for a 13th day, it’s longest consecutive rise since 1996. Markets are betting that the odds on a base rate rise, when the Federal Reserve meets in December, are now at 100%. And as a consequence traders and investors are confident that the USA economy, with Donald Trump incoming, is strong enough to weather a predicted 0.25% rise in the base rate.
Sales of previously owned homes added to the underpinning confidence in the USA economy, reaching levels not witnessed since 2007; up 2.6% month on month and at 5.6 million sales per year, defying analysts’ forecasts of a -0.6% fall. European markets were not to be left behind in the overwhelming “risk on” environment; DAX closing up 0.27%, CAC up 0.41% and the U.K. FTSE closing up 0.62%.
WTI Oil ended the day down 0.02%, after whipsawing in a range throughout the trading sessions, of circa 2 percent. The talks, amongst several oil producing countries in Vienna on Tuesday, ahead of the OPEC meeting on November 30th, haven’t resolved the question of whether (or not) Iran and Iraq will agree to production cuts. The Bloomberg Commodity Index posted its largest three day gain since June. Gold continued it’s bounce from $1200, to finish up 0.2% at $1212 per ounce.
The Dollar Spot Index; tracking the green back versus its ten major currency peers, rose 0.1 percent. The greenback gained 0.2 percent to reach 111.07 yen. The euro fell marginally versus USD, down 0.02% to 1.0528. Sterling enjoyed gains versus many of its peers, specifically USD and the Euro. Cable (GBP/USD) was up circa 0.02% at 1.2421 and a euro was worth 0.8557 for each pound sterling.
There is a considerable raft of news and data releases that may effect the markets on Wednesday. There are several European countries’ Markit PMIs, which are due for release from 8.30am to 9.00am London (GMT) time on Wednesday morning. Europe’s and specifically Germany’s manufacturing, composite and service PMIs, will be of particular interest.
Thereafter, at 12.30pm, the U.K. chancellor Phillip Hammond will present his Autumn statement, which is regarded as a pre-cursor, or mid term yearly report, before the full budget is presented in March. Naturally this speech and presentation will be monitored carefully to see if Hammond will: cut personal taxes, initiate a fiscal stimulus, and reverse any swingeing cuts to the cost of welfare in the U.K. With his deficit reduction target off course, the accepted wisdom is that the chancellor has little room for manoeuvre and as such the likelihood of any dramatic announcement, that could move the market considerably in isolation, is remote.
Other potential high impact data released on Wednesday includes USA durable goods orders; the forecast is for a 1.7% bounce from the previous month’s 0.3% fall. USA jobless claims are expected to come in at 250K, new home sales at 590K, USA flash manufacturing PMI is predicted to remain steady at 53.6 (from last month’s 53.4), the level of crude oil inventories will be announced. Whilst finally, at 7pm London time, the minutes from the Fed’s latest meeting is released.
The unusual high volume of data and news events concerning the USA released on Wednesday, are as a direct consequence of USA markets being closed for Thanksgiving on Thursday.
