Summary:
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US indices made remarkable reversal yesterday
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Poll shows Americans blame Trump for the shutdown rather than Democrats
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Japanese factory output declined once again
Yesterday’s US session showed that investors should not underestimated possibility of some wild price swings appearing at times of limited liquidity on the markets. Major stock market indices from Wall Street launched the session lower and continued to decline as the time passed. When S&P 500 (US500) was down 2.8%, bulls started to take control over the situation. The remainder of the session marked the biggest upward reversal the US stock market has seen since 2010. S&P 500 finished yesterday’s trading 0.86% higher, while Dow Jones (US30) surged as much as 1.14%. Nasdaq (US100) lagged its peers and added just 0.38%.
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US500 continues to rebound from the 21-month low. The benchmark made an impressive reversal yesterday recouping a 2.8% decline. The upward move was halted by the 38.2% Fibo level of the latest slump for now but may be set to push even higher amid light trading volumes. Did year-end rally finally arrive? Source: xStation5
The US government shutdown extended over the sixth day and there is a little scope for a change in the nearby future. Both chambers of Congress met yesterday but no solution to the ongoing shutdown was found. Moreover, it does not seem like lawmakers are even trying to find a solution as the report surfaced saying that one of the House members tried to propose way out of the crisis but his microphone was muted and he was ignored later on. The House session did not even last three minutes. The impact of the shutdown on the US economy was limited so far due to the holiday session. However, Trump and Republicans may have much more to lose. According to the poll conducted by Reuters just 35% of Americans supported securing funding for the Wall in the congressional spending bill while only 25% supported shutting down government over it. Almost half of the surveyed US citizens (47%) blamed Trump for the shutdown and 33% said its Democrats fault. While it is still some time until the next US presidential elections, Republicans may experience a drop in support once shutdown starts to make lives of US citizens harder.
Despite downbeat data from the Japanese economy JPY continues to strengthen amid uncertainty lingering on the markets. USDJPY failed to break above the 38.2% Fibo level of the upward move started in mid-March 2016 and in turn pulled back to the support zone ranging 110.10-110.45. Source: xStation5
Last but not least, let us mentioned data from the Japanese economy. Factory output in Japan tumbled 1.1% MoM in November. This marks the sixth decline during the past eight months. Most of the decline came from reduced business machinery production what is ascribed to the slowdown in China. The demand for the IT goods was also lacklustre. It is likely that such a disappointed data will be published by other countries as well in case US and Chinese negotiators fail to find solution to the ongoing trade spat. Trade talks are scheduled to resume in Beijing in the second week of January.
