Yesterday, US equity markets closed slightly up pullback from trading day highs. Despite the strong performance of corporate reports for the fourth quarter, investors were not willing to take risks in the conditions of political uncertainty, which continues to be present and to form part of the market sentiment. The US market is waiting for confirmation of Trump’s pre-election promises , in the form of laws and regulations. The promised policy of deregulation and tax cuts are stalled, causing investors to question the new administration's ability to carry out the alleged reforms.
The first results of the corporate reports season indicate higher profits of business, as analysts note a significant increase in corporate profits in the fourth quarter. According to preliminary estimates, the average corporate profits increased by 8.1%. The US trade deficit is maintained and this poses a threat to the economy, even though figures showed a slight decline in December. Yesterday, the growth leaders in the stock market became the largest corporation - Apple, Inc. , Boeing Co. and International Business Machines Corp. Today, futures for US indices are trading in neutral zone.
Oil prices were another negative factor for the market to decline in the United States. According to the American Petroleum Institute inventories increased by 14,230 million barrels of oil over the past week. Most market analysts forecast growth of 2.500 million barrels.
Asian markets closed in the green, recovering after a weak start of the day. A slight weakening of the yen helped the Japanese market to win back some of the losses. While data from Xinhua News Agency brought some positive to the markets. Chinese companies in 2016 attracted about 1 trillion yuan. However, if we consider the bigger picture - Asia-Pacific markets remain under pressure due to lower oil prices and the continuing political uncertainty in Europe and the United States.
In the FOREX currency market trading takes place in narrow ranges. It should be noted further weakening of the European currency amid european political risks. The US Dollar Index changed a little during the Asian session, amid lack of news drivers.
Restrained market dynamic persists in global markets. Corporate reports have had a positive effect on the markets, but it is coming to an end. The main driver is still the news background from the new US administration's actions. The statements of Philadelphia FRB chairman has returned confidence to the market regarding rates and strengthened US dollar. Oil prices have returned to the medium-term channel and found support around $ 54.30- $ 54.80. Today, the market focus will be on the official crude inventories data.