Today’s Key Market Drivers – 18th May 2017

Donald Trump’s economic stimulus plans appear to be fading as calls for his impeachment continue to grow as the FBI now appoints a special counsel to investigate whether there was collusion between the Trump campaign team and the Russians in the lead-up to the US election last October. Trump is also dealing with a trial by media as reports surfaced Wednesday in the Washington Post that he asked the then FBI Chief in a White House meeting to let go of an investigation into the National Security Advisor. The Dow Jones plummeted 372 points in the biggest one-day decline since Trump became President and the US Dollar vs Japanese Yen fell 230 ticks. Futures markets that were last week pricing in a 90% chance the US Fed would raise rates in June are now pricing in a 60% chance after Wednesday. Lows that are created in these volatile conditions are often retested in coming days so I advise you to be careful trying to catch a falling knife.

The big question is will the markets sell off again in the European and US trading sessions today? The answer is nobody knows but Asian stock indexes are down between 0.25% and 1.5% at 3pm AEST with no buyers in sight. The AUD did get a boost at 11.30am today with a better than expected official unemployment number that showed the official unemployment rate fell to 5.7% from 5.9% the previous month. UK Retail Sales are due in the European trading session however it is likely to be overshadowed by how stock and currency markets react when the London trading session opens at 5pm AEST this afternoon.

In times like this fear is all the rage, greed is all the rage too and it would surprise me to see stock markets recover so soon after such a savage beating on Wednesday and with the cause of the sell-off a long way away from being resolved. As I pointed out yesterday with stock markets at all time highs those that have profited from the rally will highly likely sell and I doubt that selling pressure is going to evaporate and the buyers return today. With the stock market being so high for so long without a decent correction is a sign to me that this current turmoil Trump is facing could be what the markets need to sell off in a big way in coming weeks. A healthy correction is well overdue.

Watch this space.



About the Author: Andrew Barnett

Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular key-note speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).

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