Investing.com | Nov 01, 2017 06:02AM ET
by Pinchas Cohen
h2 Key Events/h2
US equities finished October on a seventh straight monthly advance, the biggest upleg since February.
The S&P 500 ended with a 2 percent gain, while, over the same period, the Dow Jones Industrial Average added 4.4 percent, or almost a thousand points, boosted by positive corporate results and confirmed by continued economic growth and the ongoing hope of tax reform.
Small caps led equities higher, rebounding from their plunge.
In a very bullish display, Facebook (NASDAQ:FB) shares were little changed, even as the company's executives testified before Congress about Russian meddling in the 2016 US election.
h2 Global Financial Affairs/h2The first day of November opened with a bang, as shares across the Asia/Pacific region—from Tokyo to Sydney—jumped, led by technology stocks on a raised profit outlook from Sony Corp (T:6758).
European shares hit a 2-year high, led by industrials, as nickel surged, after Glencore (LON:GLEN) upgraded guidance on Tuesday based on increased demand for electric cars.
US futures also gained as the outlook for tax reform continues to drive markets. The dollar and Treasuries traded sideways, ahead of today's FOMC policy meeting and President Donald Trump’s long awaited decision on his pick for the next Fed chairperson.
Consensus says the Fed will keep rates unchanged today but continues to believe a December hike is in the cards. Dollar bulls and bears both eagerly await Trump’s decision, due at the end of the week. The current front-runner is dovish Fed board member Jerome Powell, now ahead of hawkish John Taylor who was formerly considered to be in the lead.
The USD began forming a reversal after congressional Republicans unveiled their broad principles for tax reform on July 27. That was followed by the start of the investigation on whether the Trump campaign colluded with Russia after the first indictments from Special Counsel Robert Mueller were handed out.
The tax plan has also been under massive pressure amid mounting opposition from special interest groups. Suddenly, House Republicans postponed submitting the tax bill, after they were locked up in a room for hours trying to eliminate opposition to changes to individual retirement savings and state and local tax payments. In other words, even if the tax bill does make it to the floor, investors might not be as impressed with it as they initially thought.
Meanwhile, the greenback gained versus major peers to cap a second straight monthly advance, while gold fell for a second month.
The dollar’s biggest currency peer, the euro, completed a top-reversal, in mirror image of the dollar’s bottom-reversal. Yesterday, the euro slipped as data showed inflation unexpectedly slowed in the region.
Bitcoin jumped this morning, hitting a new all-time high, after CME Group announced it would be launching futures trading on the cryptocurrency sometime at the end of 2017.
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