US equity markets closed mixed on Tuesday, as continued outperformance from the Tech sector led the Nasdaq to outperform its peers. Both the Dow Jones and the S&P500 closed lower, albeit marginally, as the Healthcare sector weighed on indices following a Citigroup downgrade of Pfizer, offsetting gains on the Dow for Microsoft. Technology was one of only two sectors in the green on the S&P.
“Risk appetite was dealt a blow overnight by claims that US President Trump may have tried to coerce ex-FBI Director Comey into dropping the probe into Gen. Flynn’s. This adds to a darkening cloud of controversy and disarray hovering over the White House. It also means more questions about the administration’s ability to garner enough Republican, let alone bipartisan support, for the policy pledges for which investors are growing increasingly impatient.” suggested Accendo Markets Analyst, Mike van Dulken
Given that the Trump rally has been a major factor in fueling the market’s record breaking levels, the emerging scandal is understandably concerning investors. “That’s because this crisis will likely prevent Trump from pushing through the very policies – like his huge infrastructure plans and generous tax cuts – that fuelled much of the recent rally any time soon, undermining the basis for the current highs.” said Spreadex Analyst, Connor Campbell.
In the UK, the FTSE quickly reduced any losses to just a handful of points, remaining around yesterday’s 7500-plus peak. Still to come is the UK jobs report where, following Tuesday’s 2.7% inflation reading, the wage growth figures will be in focus. Connor Campbell added – “Analysts are expecting the average earnings index – including bonuses – to rise from 2.3% to 2.4% month-on-month, marking the latest hit to real wages.”
The Eurozone indices were bigger movers this morning. The DAX and CAC dropping 0.4% and 0.5% respectively. “That’s likely because, unlike the pound, the euro has looked pretty strong this week.” suggested Campbell, “The euro could get another boost this Wednesday, dependent on the state of the Eurozone’s inflation reading. The figure is expected to remain at 1.9%, with the more important core CPI data also set to be unchanged at 1.2%; any improvement on these levels would be music to the euro’s ears.”