Summary:

• US equities closed the day with another gains, while NASDAQ (US100 on xStation5) established its new all-time high
• US House passes the tax bill quite smoothly so now it’s the Senate’s turn
• US100 is set to close the week higher the eighth time in a row

After a very short-lived pullback the US session brought another gains with the US100 closing at its fresh record peak adding as much as 1.3%. Besides, the SP500 (US500) and the Dow Jones (US30) increased 0.8%. The surge was underpinned by Walmart and Cisco as both reported much better than estimated earnings and revenues. EPS of Walmart amounted to $1 while a 1% dip to $0.97 had been expected, what’s more revenues moved up to $123.18 billion against the forecast at $121.05 billion. Overall the report suggests the company is effectively competing in a tough retail environment, however further outperformance of the stock could be modest as Walmart’s shares trade at double-digit premiums to their historical averages. In turn as far as Cisco is concerned adjusted EPS came in at $0.61 vs. the estimate at $0.6 while revenue beat the projection ($12.11 billion) as well and showed $12.14 billion. 

Furthermore, the gains were buoyed by the passage of the US tax bill in the House, the move which brings a significant leap forward as lawmakers seek to enact $1.5 trillion in tax cuts for businesses and individuals alike. There were 227 votes in favor and 205 votes against the bill, however as much as 13 House Republicans joined all Democrats to oppose to bill. Speaker Paul Ryan concluded that “this is a very, very big milestone in that long road”. That scenario had been anticipated and now the baton goes to the US Senate where the passage won’t be such easy as Republicans hold just a slim majority of two senators.

The US100 managed to stay above its crucial support line at around 6235 points being underpinned by a 23.6% retracement of the latest leg higher. Consequently the price drew a bullish candlestick and therefore buyers could eye another targets ahead. In addition it’s worth mentioning that the US100 is set to continue its winning streak this week as the price is drawing its eighth consecutive bullish candlestick at a weekly time frame. Source: xStation5

On the FX front one could spot that a risk-off mode could be noticed once again as the Japanese currency is slightly outperforming its peers, however it could be a by-product of USD weakness which is down across the board except the Antipodean currencies. Otherwise, the US10Y yield is sliding 2bps while the Asian markets marked the equivocal performance. The NIKKEI (JAP225) closed the day 0.2% higher, however the Shanghai Composite (CHNComp) lost 0.6% whereas the Hang Seng surged as much as 1.2%.