US investors hit panic button while Trump marches to the beat of his own drum
A two-hour rally at the end of the day restored some respectability to the Dow’s performance after it had fallen nearly 200 points from the previous day’s close of 19,971 points to hit a low of 19,785 points.
The close of 19,864 points represented a decline of 0.5%. The NASDAQ fared better, but the close of 5,614 points only represented a marginal increase on the previous day.
It should be noted that historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering stocks in these markets should seek independent financial advice.
US markets are still lacking confidence, triggered by political instability and a mixed earnings season.
The Fed Reserve’s interest rate policy meeting this week is likely to be more of a reading between the lines exercise rather than debate over whether or not interest rates will move. Most analysts are tipping rates to stay on hold.
While Fed Chairwoman, Janet Yellen, won’t be drawn on political issues, part of her charter is to factor in both domestic and global volatility when framing monetary policy. Consequently, the events of recent weeks, the sharp uptick in investor anxiety and the potential for further volatility will be issues central to decision-making over coming months.
It is worth remembering that on a number of occasions in 2016 Yellen referred to issues such as Brexit and volatility in Asian markets to keep rates on hold when domestic data was looking more positive.
Consequently, it will be difficult for Yellen to ignore the extremely fragile and uncertain political and economic conditions in the US.
All European markets trended lower with the FTSE 100 (-0.3%) responding negatively to an appreciation in the British pound, a factor that can impact the earnings of British-based companies that generate overseas income.
The DAX and the Paris CAC 40 were down 1.2% and 0.7% respectively.
The oil price pulled back sharply late in trading but still closed some 0.4% higher.
Gold was the big mover as its safe haven status saw it increase from the previous day’s close of US$1,196 per ounce to a high of US$1,217 per ounce before closing at $1,212 per ounce, representing an increase of 1.4%.
On the base metals front, zinc continues to notch up long-term highs and last night rallied more than 3% to hit the US$1.30 per pound mark. While lead has been tracking zinc’s strong run closely, it came off slightly to finish at US$1.07 per pound.
Nickel and copper both gained ground with the latter breaking through the psychological US$2.70 per pound level.
The Australian dollar went close to touching US$0.760 in early trading, but is now hovering in the vicinity of US$0.758.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.