Yesterday saw another record close on Wall St which now makes it the best run in 30 years. Investors are cautiously optimistic about Trump’s Congressional address later today, although they’ll be looking for more clarity about the policy ideas that are fuelling this rally.
Accendo Markets Analyst, Mike Van Dulken commented – “Those looking for more on US Tax changes, however, may be left wanting after Trump told the press yesterday that this depends on the cost of Obamacare’s repeal, meaning more time required. Expect much more about increased military spending at the expense of agency budgets, although anything on infrastructure spending could be enough to make up for silence on tax to sooth any bullish nerves.”
Frustratingly for the European markets, Tuesday’s focus on this afternoon’s US activity means that the FTSE is a little flat this morning. Things have been a bit livelier in the Eurozone, if only because the region has already had some data to deal with. The Q4 French GDP figure came in unchanged at 0.4%, leaving the country with growth of 1.1% across 2016.
Spreadex Analyst, Connor Campbell suggested that – “Investors weren’t particularly impressed, the CAC rising just 0.2%, though that was admittedly a tad more than the 0.1% jump seen by the DAX.”
In focus today
As well as the build up to tonight’s Congressional address by Trump, we’ll see the second estimate for US Q4 GDP figures. The president will likely provide some long awaited clarity on a portion of his administration’s fiscal stimulus, using a prime-time slot to announce an increase in infrastructure spending, although those hoping for talks of tax cuts may be left disappointed. Trump is also likely to formally ask Congress for approval of a $54bn increase in defence spending while potentially also revealing his solution to Obamacare.
The second reading of US Q4 GDP is expected to see an uptick from the provisional reading from 1.9% to 2.1% as the US economy begins to feel the Trump effect. This remains a way off Trump’s 4% target, however it remains early days, while expectations of an increase to Personal Consumption will help to bolster calls of a growing US economy.