The US market interrupted the positive trend of the last few days which left stock indexes steadily higher.
Seriously? That’s it?
[U]From 6,000 to 244,000[/U] is “slightly”? I’m wondering what a [I][U]big[/U][/I] move would look like … 
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President Trump is expected to disclose more details of his fiscal policy, which has been somewhat vague. With US equity markets trading at record highs, investors seem to anticipate that not only will the measures be approved but will have an impact on the economy. It is curious how a politician so little consensual and who arouses conflicting emotions in public opinion has achieved such a broad consensus among investors. Thus, there is a risk that these investors may be disappointed or that the market behaves according to the old aphorism of Buy on rumors sell on facts.
One of the main news of the day was related to the merger between the two European stock exchanges London Stock Exchange Group and Deutsche Boërse, which could be fought by the European Commission. Consequently, the shares of the two exchanges fell significantly.
Although Donald Trump did not give much detail about the fiscal reform announced during his election campaign, the market was trading higher, with Dow Jones having already surpassed the psychological barrier of 21,000 points. The probability of the Fed raising interest rates returned to the stock market scenario on a day marked by the publication of various economic indicators.
As in the US, the reaction of stock markets in Europe to Donald Trump’s speech last night in Congress was positive, especially in the construction and commodity-producing sectors.
The US market was trading at a slight low. In terms of economic indicators, the number of weekly claims for unemployment benefits has fallen to the low of the last 44 years last week, continuing to point to a strong labor market. This indicator fell by 19 000 to 223 000 in the week ending 25 February (vs. 243 000 expected), thus reaching the lowest since March 1973. This was already the 104th consecutive week in which the number of applications for unemployment benefits Remained below 300,000, the highest since 1970.
The fall of the market on Wall Street ended up impacting Asian markets that ended today’s session in negative territory. Investors’ attentions focused primarily on the US Federal Reserve’s monetary policy. In South Korea, the market was under pressure from the country’s tensions with China.
Components of the Europe Stoxx 600 index showed an average increase of 11% in profits compared to the previous year, the highest growth of the last two years, compared to 4.90% observed in the constituents of the S & P500 index . Among the various factors that may underlie the expected overperformance for 2017 are the weakness of the Euro, the rise in commodity prices and the recovery of the banking sector.
In terms of economic indicators in the United States, new orders to industry increased in January for the second consecutive month, suggesting that the recovery of the sector is gaining momentum, as the rise in commodity prices increases demand for machinery. Thus, orders for goods to industry rose 1.20%, after the increase of 1.30% in December. Economists estimated an increase of 1.00% in January.
This week, another risk factor that may weigh on the global economic growth: the downward revision of Chinese growth estimated by the prime minister. Briefly, a more optimistic speech may be adopted, supported by the release of economic information aimed at strengthening activity, while in terms of inflation the ECB should maintain a cautious discourse.
Yesterday the price of crude fell by more than 5 percent after the Energy Department revealed last week that oil inventories increased by 8.2 million barrels, compared to an expected increase of just 1.2 million barrels.
For the asset purchase program launched in 2015, the ECB indicated that it will continue to make acquisitions at a monthly pace of 80 000 M.€ until the end of March and from April onwards the purchases will be at a rate of 60 000 M.€ until the end of December, or later, if necessary. The main novelty was that the ECB had withdrawn from the statement the phrase about whether the ECB could use “all instruments available” to apply more stimulus to the economy. Mario Draghi explained that this phrase was withdrawn to “signal that the ECB considers that the sense of urgency, which existed when there was a risk of deflation, has disappeared.”
This week, in addition to the Fed meeting, the focus will be on the political front as in a few months begins important electoral events in the Eurozone and whose results may aggravate the uncertainty and fears to the current European project: legislative elections in the Netherlands next Wednesday (15 March), presidential elections in France (1st round on 23rd April and 2nd round on 7th May) and legislative elections in Germany (24th September).
Many traders are already thinking about fresh strategies and the market forces which will shape the 2nd quarter of 2017. With that in mind, now is a good time to revisit and reconsider our individual trading styles and faults, and to see what we can improve.
Financial markets will now be faced with two important events: the Dutch elections and the Fed meeting in the US. As a matter of curiosity, the longest record to form a government (208 days) was in Holland and dates from 1977.
In the foreign exchange market, the Euro is still appreciating agains the dollar after the impulse candle from Tuesday of more than 1%.
Construction permits declined 6.20% in February to 1.21 million, which may be a sign that higher interest rates are actually driving Americans to rethink their plans for housing.