In just over a week president elect Trump will be inaugurated and it will be President Trump. It was expected that president elect Trump’s press conference would have an impact on the market, and an impact it made.
While the expectation was that he would focus and elaborate a little bit on his fiscal plans and the stimulus, he spoke on other matters and as such we saw the USD lose ground across the board. He did mention the healthcare sector in a not so positive way to put it mildly, which saw severe downside on the sector.
The main events for today are speeches by several FED members, culminating with FED Chair Yellen at the end of the day.
Currencies
EUR/USD – was trading firmly below the 1.05 level, but started to rebound sharply during and after president elect Trump’s press conference.
USD/JPY – also turned around later in the afternoon and dropped below the 115 level to mark the lowest level in a month. It is on its way to mark only its 3 weekly decline since November, and if things don’t change drastically it will be the largest weekly decline since July.
GBP/USD – the stronger than expected manufacturing production was unable to lift the GBP as the Brexit fears is what is weighing heavily on the GBP. This saw the pair drop below the 1.21 level as well, and it started to come close the breaking below the 1.20 level, before it started to recover some lost ground, especially helped due to the weakening of the USD. The BOE is relatively content with the performance of the economy after the Brexit vote so far, and could be increasing its outlook once more after having it downgraded straight after the Brexit referendum.
Bitcoin – it took Bitcoin a month to rise from the current level to its new record high just below the 1100 level, but it took only a week to drop over $300 as there are severe concerns that China will be clamping down on Bitcoin trading and exchanges.
Indices
S&P 500 – saw some fluctuations yesterday and was able to end the day slightly higher, but it trading lower again this morning, just like it did yesterday. There was upwards pressure from mainly the energy sector and utilities, but also downwards pressure due to the drop in the health care sector.
Commodities
Gold – the resistance around the 1195 level proved to be no trouble at all as the USD continues to weaken and gold continues to start the year very positively. Gold has risen already over 4% since the beginning of the year. We will pay attention to the speeches from the different FED officials and FED Chair Yellen to see if they comment on monetary policy.
Oil – was trading marginally higher for most of the day, and while the EIA inventories was pretty bearish, we saw oil jump higher afterwards, after seeing a drop in the beginning. Inventories rose with over 4 million barrels, and also distillates and gasoline inventories rose, and what is also important, production in the US rose significantly. On the other hand, we saw that demand in the US for oil was still quite high. Perhaps more importantly though, it appears that news that Saudi Arabia has informed its Asian customers that supply will be less next month was able to bring confidence back that the agreement to cut production will be abided by.
Stocks
Johnson & Johnson (NYSE:JNJ), Perrigo, Pfizer (NYSE:PFE) & Teva – these are all healthcare/pharmaceutical companies that have seen serious downside after the press conference of president elect Trump, as he accuses pharmaceutical companies of “getting away with murder” as they overprice medications and vowed to have that changed.
Lockheed Martin (NYSE:LMT) – president elect Trump once again took aim at the company for the expensive F-35 Joint Strike Fighter program. He did the same thing last month in a tweet, and has said yesterday that he wants to bring the price down and is also looking for alternatives. Also Senator John McCain launched some criticism on the program which has seen multiple delays and cost overruns. Obviously the stock didn’t react positively although it didn’t close that much lower.