Donald Trump’s address to congress failed to stir markets. Instead, investors focused on the Federal Reserve. Fed policymakers announced on Tuesday that a detailed description of a tax recode reform was not needed to raise rates. This sentiment from the Fed rallied the greenback. US indices are rising on the back of the hawkish Fed. The odds for an increase in borrowing costs in March have lifted to 60%, which has elevated the dollar to $1.054 against the euro.
Trump’s speech was more positive than those in the past. The US president called on Americans to relinquish the conflict brought about by the controversial election results and to stand united.
On immigration, Trump softened. The president did again however, promise to build his infamous wall. While fraying ties with Mexico, Trump did emphasis that the US was open to making new ties. The comment seemed to be an attempt to revamp the long-standing relationship with Russia, that has previously been marked by a contentious dynamic.
The markets lack of interest in Trump’s comments unpins a wider trend in which investors are paying less heed to the rhetoric of the US president. Instead, investors are searching for details as the rumour of fiscal stimulus is already priced into the market.
Over in Europe, equities are also on an upward trend. The DAX 30 is leading the heard at €11989, up 1.35%. CAC 40 is climbing up 1.3%, trading ta €4922, tantalisingly close to the €5000 mark. It’s been a stunning week for the FTSE MIB, Italy’s proxy, up again today at €19215, that’s an increase of 1.6%.
The United Kingdom’s manufacturing PMI came in at a disappointing 54.6. However, the number is still above the 50 mark, which indicates expansion of the industry. The FTSE 100 is edging up 0.7%, at £7311 – lifted by the positive vibes across equity markets.
The Nikkei 225 is the biggest winner in equity markets, up 2.3%, ta ¥19495. The index has been rising steadily since the second half of 2016. Japan’s strengthening economic fundamentals have pushed up the index. The weakening yen has also been supportive to the index’s growth as many of the companies listed on the Nikkei 225 are heavily dependent on a healthy export market.
Market Watchlist
Snap, the parent company of beloved Shapchat will price its initial IPO (initial public offering) after US close today. The IPO release is highly-anticipated and the demand for the stock is lifting, the company is valued at up to 22.3 billion.
Banco Sabadell inched up 5% this morning. Iberiabank said it would buy Sabadell United Bank for $1 billion from the Spanish bank, which helped push up the price of Banco Sabadell.
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