US equity indices fell the most in over a month after US Democrats formally launched an impeachment inquiry over President Trump with regards to his phone call with the president of Ukraine.
Democratic spokeswomen Nancy Pelosi accused Mr Trump of ‘betrayal of his oath of office, betrayal of our national security and betrayal of the integrity of our election’.
Despite knee-jerk reactions by investors in response to heightened US political uncertainty, political observers believe that the likelihood of Trump being impeached and removed from the White house before his term ends is small. This is because a Republican-controlled Senate would be unlikely to convict him, even if the impeachment received majority of the House votes.
US consumer confidence survey fell abruptly in August. The reading of 125.1 marks a sharp revision down from previous month’s reading of 134.2 and also came below market forecast of 133.5. This reflects weakened consumer sentiment and spending appetite, which can spiral into the holiday shopping season and dampen corporate earnings outlook. Dollar fell against it’s G10 peers overnight but climbed back a bit this morning.
The S&P 500 index fell 0.85% to 2,966 points, while Nasdaq index lost 1.46% to 7,993 points. Sector wise, defensive utilities (+1.06%) and consumer staples (+0.23%) outperformed energy (-1.63%), communication (-1.34%), consumer discretionary (-1.19%) and information technology (1.02%).
Technically, S&P 500 index has retraced to a range of 2,956-2,972 points seeking for support. Breaking down below 2,956 will open the floor for more downside towards 2,940 and then 2,888 points.
In the currency market, USD/JPY fell for a fourth consecutive day to reflect souring risk sentiment across broad markets as a result of trade uncertainty, awful Germany data and US political turbulence.
Similarly, gold price climbed for a fourth day to US$ 1,532 as capital flee into safe-havens seeking for safety.
In Singapore, the benchmark index STI was drifting in ebbs and flows off foreign news this week, with overall sentiment leaning towards cautious mode. Today, cyclical sectors such as financials, industrials, technology and shipbuilding were sold off, whereas defensive REITs, consumer staples and developers were performing better.
Going forward, the development of the US-China trade deal, President Trump’s impeachment inquiry and a softening global growth outlook is going to dominate the trading for the rest of the week.
US SPX 500 – Cash (4-hours)
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Margaret Yang Yan