Yesterday, Wall Street finally pulled back from it’s record-breaking run. More political scandal, a lack of policy clarity and perhaps realisation about another US rate hike are offsetting all that optimism from Trump’s congressional address. Even a very positive reception to Snap’s IPO has failed to rekindle bullishness, with sentiment perhaps weighed on by disappointing Chinese and Japanese PMI Services overnight.
Accendo Markets Analyst, Mike Van Dulken commented – “US equity markets pulled back from record highs despite a well-received Snap IPO yesterday as investors took stock of holdings and engaged in some profit taking. Caterpillar was the laggard for the Dow Jones as its offices were investigated by law officials, while Financial stocks weighed on the S&P 500, however crucially its 0.6% decline did not break the index’s 90-day run of sessions without a greater than 1% decline.”
After effectively sitting out Thursday, the European markets decided to give back some of the week’s rapid growth this morning. Shedding 25 points after the bell, the FTSE started Friday holding above 7350. A smattering of red in its mining sector, and perhaps just a bit of doubt about just how high the index currently sits, seemed responsible for the FTSE’s fall. The pound saw similar losses, slipping to a fresh 6 week nadir against the dollar while handing 0.2% in value back to the euro.
Spreadex Analyst, Connor Campbell noted – “Sentiment could shift, however, dependant on the state of the latest services PMI. Analysts are expecting the figure to dip from 54.5 to 54.2 month-on-month, though this week those estimates haven’t been very accurate, with the manufacturing and construction PMIs under- and out-performing forecasts respectively. If the services reading can avoid a February dip then the pound may be lifted away from its current lows; if not than sterling’s decline may well intensify.”
In focus today
The US Dollar eased its ascent yesterday but the temporary respite could end today as fresh Fed commentary is expected. Several key US policymakers will be speaking publicly including Fed Chief Yellen and Vice Chair Fischer;
ADS Securities Analyst, Konstantinos Anthis commented – “given what we have heard from them recently and based on the performance of the economy as seen in recent reports expectations are set for a continuation of their bullish tone.”
Data wise, PMI Services readings will be the order of the day with figures from Spain, Italy, France, Germany and headline Eurozone all expected to confirm continued improvement for February while the UK and US cool from their December highs