Market Review – Fundamental Perspective 19 December 2017

US equity markets closed in the green yesterday and the S&P 500 reached a new record high on optimism that the US tax bill will get passed before Christmas. US Senator Collins, who previously had not declared how she would vote, announced her support for the bill which should all but ensure that it gets passed this week.
Asian equity markets generally followed their US counterparts higher overnight whilst USD remained stable in a quiet session in FX markets.
In South Africa, Cyril Ramaphosa was elected new ANC President on a tight vote of 2261 to 2440, prompting ZAR to strengthen by more than 4% yesterday versus USD before stabilizing around 12.75. Barclays Research has revised its USDZAR forecast lower, but warns of ongoing uncertainty regarding political leadership, especially given that Mabuza is the new Deputy President.
Euro area headline inflation for November printed at 1.5%, edging up 0.1pp from October, mainly led by higher energy prices. Barclays Research expects Euro Area inflation to gradually fall in coming months as some components like food and services seem to be losing momentum.
The December RBA meeting minutes released earlier today had little impact on markets and AUD was relatively unchanged despite the bank expressing an increased confidence that economic growth will pick up next year.

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