The week after the US elections

The exuberance of a Trumponomics-led rally have taken somewhat of a breather on Friday. 

Source: Bloomberg

As we enter the new week, the post-election sentiment is expected to subside. Economic indicators could return to the foreground in guiding market actions. Nevertheless, jolts of market reaction will not be ruled out, should we glean more from the Trump’s transition team.

Fickle, are our minds, volatile, are our markets. The S&P 500 index ended Friday down 0.14% with the energy and healthcare sectors leading losses, both of which clocked gains in the two sessions post-elections. The heavily hit information technology sector has also retraced some of the losses on Friday to gain 0.47%, though this was not enough to bring the headline index higher. While the stock market action on Wednesday and Thursday had been riding on the sentiment with regards to Trumponomics, Friday likely served as a reality check for markets. This is especially so given the President-elect’s relatively moderate stance post-elections. Nevertheless, with the landmark TPP deal likely shoved off the table at the moment, Asian markets are unlikely to receive much reprieve at the start of the week.

Separately, Oil - US Crude prices took another hit as Iran ramped up output, challenging the OPEC’s efforts to limit production. At 250,000 barrels a day, output from Iran had accelerated faster than expected. WTI futures plummeted approximately 0.4% on Friday and was last seen on either side of $43.50/bbl. A year ago, the market had been projecting a pickup in crude oil prices in the second half of 2016. A year later, we are still fluctuating around similar price levels, with all hopes pinned on the upcoming OPEC meeting. With the US’ potential pro-drilling stance to set in as well, the possibility of re-staging January’s lows have again resurfaced.


Japan’s Q3 GDP

Separately, Japan’s Q3 GDP arrived early morning and surprised on the upside at 0.5% QoQ. This is above the market consensus and previous reading of 0.2% QoQ. While the market had largely been expecting a flat reading, the latest reading certainly injected a boost of optimism for the markets. The Nikkei was seen a tad higher at the open. On the other hand, the JPY slipped with USD/JPY breaking above $107.00 this morning, triggering stops above. This comes as Japan's economy minister highlighted risks from China and emerging economies that could give rise to a more moderate recovery for the country.

With the weak leads, Asian markets could continue to see some downward pressure at the start of the week. China’s industrial production and retail sales will be due in the morning, though we are not expecting much surprise from this installation. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.