US Futures Higher While Investors Keep Their Focus on FANG

US Futures Higher While Investors Keep Their Focus on FANG | Theresa May and Brexit Under Focus

US Futures are trading higher this morning as investors are picking up positive momentum from the European markets. The dollar index is strong today and there has been some interest amid investors because of the Fed. After all, they are still on the tightening path with respect to their interest rate. In the US equity market, it is mainly about two sectors making headlines; the baking and the tech sector.

President Trump has finally laid out a plan which is geared towards the banking regulation and includes a more flexible approach for banks in relation to their trading and stress tests. But we are still far off from getting any meaningful results given that the high court still upholds its decision on Trump's travel plans. Therefore, the prospects of Trump's banking regulations becoming a reality is still a very optimistic hope.

The tech sector, investors are taking the precautionary approach as they do think that FANG could be overpriced. Facebook, Apple, Alphabet and Google, all have helped to push the stock market higher.

The movement in the British pound is very much dependent on Theresa May’s ongoing efforts to form a government. Investors are sceptical if her government will last long given that a number of her party members are not happy with her. She has indicated that she is willing to accept the soft version of Brexit after previously being against labelling the different versions of Brexit. She is going to meet with Northern Ireland's DUP party member with the hope to secure enough seats to form a government.

However, we do maintain our call that the chances of her government surviving are very little. At the same time, it is important to emphasise that the job in question is extremely messy and it does require someone with strong personality who can not only manage the Brexit negotiation process but also be able to drive the country towards the right path and away from a disaster scenario.

In terms of economic data, it is the inflation number which gauges the most attention today. The UK inflation may once again overshoot the Bank of England's target. The economic number released yesterday already confirmed the very fact that higher prices and the lower currency have made investors to tighten up their belt and they are no longer digging deep in their pockets. The house spending fell last month for the first time since 2013. This is not an encouraging sign at all.

The euro is still not gaining much momentum despite the landslide victory of the new French president in parliamentary elections which also dented the chances for the Five Star Movement in Italy.

© Scoop Media