Trump Stock Market Rally Continues, US Dollar is on Fire

On Monday, US financial markets drifted higher on low volume trade. Traders bought some recently less-favored sectors and some post-election play lagged as the Electoral College confirmed Donald Trump would be the next President of the United States. US futures continue to rise on Tuesday morning along with most global indices.

The US Dollar strength continues on Tuesday morning as the greenback climbs versus most currencies. US dollar index trades at 103.34. USD/JPY climbed to 118.70, 0.90% after BoJ left interest rate unchanged. EUR/USD is trading below 1.04.

What we saw was a technicality of overflow in equities. People picked up plays that had been lagging and overall gains on the markets have been coming smaller and smaller. Telecommunications, which are the second best performer on the S&P 500 since the election led gainers rising 1.1 percent. This was followed by real estate, industrials and technology stocks.

Both real estate and technology plays are two of the biggest laggards since Election Day. Financial stocks are the top performer and have been clinging on to slight gains while energy stocks have been the third worst performer since the election and moved lower on Monday.

There is still a lot of consolidation in the equity markets and the path of least resistance is higher. This means we could still see the S&P 500 tack on some solid gains this week into the New Year.

As far as technology plays were concerned, the Nasdaq 100 hit a new all-time intraday high while all three of the major indices came within three quarters of percent of their record highs.

Turning to economic news, the flash Markit PMI for December printed at 53.4. This was down from the 54.6 print for the month of November.

Federal Reserve Board Chair Janet Yellen said that the US had its strongest job market in a decade. There are also signs that wage growth is starting to pick up. These comments came at a speech she was giving at the University of Baltimore commencement ceremony.

Last week, the Federal Reserve raised its Fed Funds rate for the second time in a decade. They also surprised the markets by steepening their rate hike path in 2017 to three rate hikes. Investors were expecting two.

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