After yet another foray into unknown territory on S&P500 and Nasdaq in Wednesday’s session, investors are now slightly less aggressive when it comes to pulling Wall Street a little higher. This is not only because there are news of spread of the coronavirus epidemic to the rest of the world would increase uncertainty, or its progression in China, but one more pause to assess in some detail of the impacts that inevitably stop that already existed will cause in western economies and companies, very exposed to the second largest economy of the world.
One of the factors of caution comes from the warning made by the chief equity strategist at Goldman Sachs, who said that a correction of the markets is now more likely in the short term, which will not be surprising given the extent of the gains in recent months, however it is also less likely to gauge how this correction can be. Remembering that at the moment the short positions in the North American indices have been at a minimum since the financial crisis of 2007, that is, we are in a complacent territory, which does not mean that this will result in a correction because until proven otherwise, the support caused by the hand of central banks proves to be too strong to be overthrown.
For now, the behaviour of the sectors is mixed, with no focus of great interest in the market except for the foreign exchange, where the US Dollar continues to run over everything and everyone. The US currency follows this Thursday with another 0.4% appreciation against a basket of other major currencies, an unequivocal sign of confidence given by investors, on the ability of the world’s largest economy to overcome this year’s uncertainties without big shocks, not least because it is the year of presidential elections.
