FTSE -7 points at 7283
DAX -20 points at 11626
CAC -12 points at 4876
Euro Stoxx -10 points at 3297
The US President-elect Donald Trump delivered his first press conference yesterday. The lack of details, especially regarding his fiscal policy plans, disappointed the financial markets, although he reiterated his commitment to business-friendly tax cuts, deregulation and ‘very large border tax’ to prevent the US companies from shifting their production abroad.
Investors’ enthusiasm was also dented by Russian spy shenanigans, the anti-Chinese stance, the wall-building rhetoric and also the questionable ethics regarding the new President’s plans to maintain his ownership in his business empire despite leaving his responsibilities to his sons.
All in all, the Trump-magic didn’t happen this time around. The US Treasuries rose on lack of details, while the US dollar softened. Still, the US equity markets traded marginally higher. The S&P 500 gained 0.38%, while the Dow Jones traded just shy of the 20’000 level.
Cherry on top, Secretary of State Nominee Tillerson said that China couldn’t access the South China Sea Islands, reviving tensions with China.
The US equity futures traded down in Asia.
The US dollar softened against the majority of the world currencies, except the Mexican peso (-0.23%) and the Turkish lira (-0.90%).
Punches, bites and flying flowerpots marked the Turkish Parliament’s late night meeting, as lawmakers voted to approve the 5th article of the new legislation that would be submitted for the constitutional referendum. The opponent CHP said that this clause aimed to dissolve the Parliament and refused to vote for such an important issue at 3 am in the morning. The party said that the vote should be broadcasted. As a result, the lira remains under pressure. The USD/TRY hit a record high at 3.9412.
Asian stock markets traded lower, as Hang Seng weakened for the sixth consecutive session. Nikkei (-1.19%) and Topix (-0.97%) sold off in Tokyo, as the yen (+0.77%) gained the most against the greenback among the G10 currencies. The USD/JPY broke below the 105.00 level and traded under the 50-day moving average for the second consecutive day. Softer US yields could encourage a further sell-off toward the 114.00/113.50 area.
The broad based USD depreciation helped the EUR/USD higher. The pair extended gains to 1.0615 before the release of the European Central Bank (ECB) December meeting minutes due today. The ECB reduced the size of its Quantitative Easing (QE) program from 80 to 60 billion euros, yet committed to continue its purchases until December 2017, and beyond if needed. President Mario Draghi made it clear that this is not a tapering. Hence, the minutes will likely favour the ECB doves. If this is the case, we could see a limited upside in the EUR/USD. The key mid-term support stands at 1.0707 (major 38.2% retracement on post-Trump USD rally).
The pound (+0.07%) was one of the weakest performers against the dwindling US dollar, as the Bank of England Governor Mark Carney said that the Brexit had potential to amplify risks to the UK’s economy. Still, the FTSE extended record to 7328.51p yesterday.
London banks demand a special Brexit deal, to secure their access to the EU business as well as to talent. The enthusiasm could rapidly fade given that PM Theresa May had already cited that the UK’s financial businesses would not benefit from a special treatment.
The FTSE futures (-0.01%) were flat in Asia.
The FTSE is expected to open 7 points softer in London. Is it time for consolidation, or is there any more potential left on the upside?