US equity markets suffered their worst day since Donald Trump’s election as concerns about the pace of the President’s fiscal reform weighed on market sentiment. 109 days later, the S&P 500 finally broke its longest run of closes without a 1% fall since 1995, as Financials led all sectors (ex-Utilities) lower. It was the same story for the Dow Jones as Goldman Sachs, the post-Trump election darling, weighed on the index, while the Tech-heavy Nasdaq underperformed, down 1.8%.
Accendo Markets Analyst, Mike Van Dulken commented – “The driver for the sell-off is uncertainty about implementation of the US policies that have driven the optimism that fuelled the Trump reflation trade, ushering markets to recent highs. After 2-months in office, markets want proof not just promises, fearful that the Healthcare reform Trump is using to put his stamp on the presidency could delay the tax cuts and infrastructure spending markets desire so much more.”
With the Dow Jones at its current low, and the Asian markets following suit, the European indices opened in a deep shade of red after the bell. The FTSE shed almost 60 points, and could fall below 7300 for the first time in a fortnight if its losses widen, while the DAX and CAC both ducked significantly under 12000 and 5000 respectively after falling 0.6% to 0.7% apiece.
Spreadex Analyst, Connor Campbell noted – “Things were far calmer on the forex markets, however. The pound – still packing the extra muscle afforded to it by yesterday’s huge increase in UK inflation – managed to sit flat just below 1.25 against the dollar, cementing its near month peak. The euro, itself benefiting from Emmanuel Macron’s strong performance in the French presidential debate on Monday, also opening relatively unchanged, dipping just 0.1% against both sterling and the greenback.”
In focus today, with a conspicuous dearth of both macro data and notable speakers, will be US House Price data, US Existing Home Sales and weekly Oil inventories. Van Dulken suggested – “The former is seen staying put at 0.4% in January after November’s 0.7% reading, Home Sales are seen cooling after January’s 10-year highs, while Oil inventories are expected to show a build once again after last week’s drawdown.”