Equity Markets Are Happy after the FOMC’s Meeting Minutes
Equity markets had a positive reaction to the FOMC’s meeting minutes in May. The S&P 500 Index (SPY) record another lifetime high of 2,405.58 on May 24.
The FOMC’s May meeting minutes were released on Wednesday. Now, markets (SPY) doubt if the Fed will hike interest rates in the June meeting.
This week’s data surpassed analyst expectations. Inflation for April came in at a healthy 2.7%.
The Japanese yen (FXY) closed at 111.28 last week after clocking in a low of 110.21 in the volatile week.
Economic data from the Eurozone continued to improve.
CFTC data released on Friday indicated that commercial traders maintained a net position of 5,756 contracts in the previous week.
US markets had the worst trading session so far this year on Wednesday, May 17, 2017.
The health care sector (IBB) (VHT) (XBI) has been the most challenged sector since Donald Trump’s presidential campaign.
2016 proved fruitful for the energy sector (XLE) with an improvement in oil prices (USO) (USL).
The US stock market as depicted by the S&P 500 Index (SPY) (SPXL) (IVV) closed 2016 with gains of 11%.
Semiconductors have outperformed during summer months returning 1.1% on average.
The big winner since the US elections has been the financial sector, which is up 14% as of May 8, 2017.
The relief rally that occurred after France’s election results were declared on May 7, 2017, failed to push US markets (SPY) higher.
Markets were relieved as Emmanuel Macron, the independent centrist, gained the lead in the first round of France’s presidential election.
The first round of France’s presidential election was conducted on April 23, 2017. There was a sense of anxiety among market participants.
We can also expect some risk-off events based on the policy decisions of the Bank of Japan, which is also undergoing a quantitative easing program.
Risk aversion is on the rise again as investors begin to question President Trump’s trade policies and as we’ve begun to see changes in asset allocations.
Equity markets trended lower after the Fed’s March meeting minutes were reported. In the minutes, some FOMC members sound concerned about the rise in equities.
After the election results were announced in the US, the Dollar Index (UUP) surged to levels above the 103 mark in anticipation of fiscal stimulus, tax breaks, improving economic conditions, and the possibility of rate hikes.
Global growth is expected to drag itself into greener pastures supported by the improving global and US factory output and sentiment indicators.