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EURUSD breaks above resistance - PM Bulletin
31 Jan 2017
Equities recover after Monday’s sell-off - AM Briefing
31 Jan 2017
Trending markets and Andrews’ Pitchfork -Trading Guide
30 Jan 2017
Investors rattled by Trump’s curbs - AM Briefing
30 Jan 2017
Dow holds above 20,000 as dollar firms - AM Briefing
27 Jan 2017
Dow breaks above 20,000 - Video Update
26 Jan 2017
Dow at 20,000 boosts risk appetite - AM Briefing
26 Jan 2017
Dow finally breaks 20,000 - PM Bulletin
25 Jan 2017
Wall Street leads stocks higher - AM Briefing
25 Jan 2017
Consolidation continues - Video Update
24 Jan 2017
Dollar recovery helps lift sentiment - AM Briefing
24 Jan 2017
Money management and stop-losses -Trading Guide
23 Jan 2017
Stocks fall on US protectionism fears - AM Briefing
23 Jan 2017
Trump inauguration in focus - AM Briefing
20 Jan 2017
A look-ahead to Trump’s inauguration - Video Update
19 Jan 2017
ECB President Draghi’s press conference in focus - AM Briefing
19 Jan 2017
Dollar steadies after sell-off - Video Update
18 Jan 2017
Equities drift in featureless trade - AM Briefing
18 Jan 2017
Dollar pull-back lifts precious metals- PM Bulletin
17 Jan 2017
Dollar slumps in early trade - AM Briefing
17 Jan 2017
Charting analysis for beginners - Trading Guide
16 Jan 2017
Sterling slumps on “Hard Brexit” concerns - AM Briefing
16 Jan 2017
Earnings in focus - AM Briefing
13 Jan 2017
Fourth quarter earnings in focus - Video Update
12 Jan 2017
Market Info Update: Martin Luther King Day Monday 16th January 2017
12 Jan 2017
Dollar lower as Trump skips stimulus talk - AM Briefing
12 Jan 2017
Trump news conference - Video Update
11 Jan 2017
Trump press conference in focus - AM Briefing
11 Jan 2017
Has gold turned a corner? - PM Bulletin
10 Jan 2017
Another mixed start for Europe - AM Briefing
10 Jan 2017
Trading Psychology - Trading Guides
09 Jan 2017
Sterling slips on "Hard Brexit" fears - AM Briefing
09 Jan 2017
Non-Farm Payrolls in focus - AM Briefing
06 Jan 2017
Non-Farm Payroll look-ahead - Video Update
05 Jan 2017
FOMC minutes viewed as hawkish - AM Briefing
05 Jan 2017
Look-ahead to release of FOMC minutes - Video Update
04 Jan 2017
FOMC minutes in focus - AM Briefing
04 Jan 2017
Strong start to 2017 - PM Bulletin
03 Jan 2017
Equities push higher in first session of 2017 - AM Briefing
03 Jan 2017
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 Wednesday 25 January 2017

Dow finally breaks 20,000 - PM Bulletin

 

 

https://www.spreadco.com/assets/25.01.17v1.png

Dow breaks 20,000

On 23rd November the Dow Jones Industrial Average crossed above 19,000 for the first time in its history. This was just two weeks after Donald Trump’s unexpected election victory which saw the index slump below 17,500 as the early results came through.

Earlier today the index hit another, and arguably more important, milestone when it broke above 20,000 - just 64 days after breaking above 19,000. As a comparison, it took the Dow 23 months from when it first broke above 18,000 to break above 19,000. It’s also worth noting that since breaking above 19,000 the Dow hasn’t once traded below that level.

If the Dow manages to hold on to today’s early gains then it will join the S&P500 in clocking up a fresh record high this week. This suggests that a clear break-out is on the cards after these two indices traded sideways in a consolidation pattern from early in December. This was when investors seemed to lose their collective post-election mojo after hoovering up equities in the aftermath of Trump’s election win. The stock market euphoria came on Trump’s campaign promises of infrastructure spending, tax cuts and regulatory roll-back. The pause came as investors became wary of overreacting to promises rather than concrete actions.

There was a miniscule wobble at the beginning of the week as President Trump emphasised rolling back trade agreements over fiscal stimulus. But yesterday investors watched as the new president sat in the Oval Office signing executive orders expediting the Keystone XL and Dakota Access pipelines while ensuring US steelworkers manufactured the pipes themselves. Love him or loathe him, it was a highly effective piece of PR. Suddenly here was a US President actively working to create jobs and boost the US economy.

Later today that same president is expected to sign more executive orders, only these ones are designed to restrict immigration. On top of that we’re getting deeper into a crucial US earnings season where investors will want to see that the last quarter’s year-on-year pick-up in earnings wasn’t a fluke.

In the meantime, it’s interesting to see that the dollar has turned lower since the beginning of the year. This should help US multinationals with overseas sales. However, it’s worth remembering that the main impetus for dollar strength has been raised growth and inflation expectations on the back of Trump’s promised fiscal stimulus. If that proves to be over-hyped then much of the reason for a higher equity market disappears. Then we’ll see if the 20,000 level proves as difficult to break away from as the 10,000 level was. UBS’s Art Cashin notes that the 10,000 level was crossed 57 times before it was finally left behind.

Dollar Index sell-off since the beginning of the year:

https://www.spreadco.com/assets/25.01.17.png

(Bloomberg)

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Posted by David Morrison

Category: PM Bulletin


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