We have US markets clocking one fresh high after another, rallying hard since the US elections, and inspiring a lift in global equities. This week, sentiment can be seen waning, particularly given the vacuum of positive leads.
The first decline of over 1.0% since October 2016 was printed for the S&P 500 index on Tuesday, with seemingly little reasons to significantly test investors’ faith. A close examination of the sectoral movements attributed the retreat to an unwinding of the Trump rally. Indeed with the upcoming vote on the healthcare reform bill, the new administration’s effectiveness may be put to the test.
Certainly it appears that we are lacking any strong themes for global market. If anything, we might still count on the Fed to sway markets despite the apparent gap between now and the next Fed meeting where we might see a lift in interest rates. Federal Reserve chair Janet Yellen has left the market little to work on this week and the USD continued to retreat. Specifically, USD/JPY dug deeper past the 100 day moving-average. The upcoming week will not be finding itself short of Fed comments and the bias pointing to the downside.