NEWS AND ANALYSIS

Incisive market commentary and expert opinion

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
 
+ Show blog menu

Categories

Menu

Collapse 2017 <span class='blogcount'>(231)</span>2017 (231)
Expand July <span class='blogcount'>(24)</span>July (24)
Expand June <span class='blogcount'>(28)</span>June (28)
Expand May <span class='blogcount'>(35)</span>May (35)
Expand April <span class='blogcount'>(31)</span>April (31)
Expand March <span class='blogcount'>(38)</span>March (38)
Expand February <span class='blogcount'>(36)</span>February (36)
Collapse January <span class='blogcount'>(39)</span>January (39)
EURUSD breaks above resistance - PM Bulletin
31 Jan 2017
Equities recover after Monday’s sell-off - AM Briefing
31 Jan 2017
Trending markets and Andrews’ Pitchfork -Trading Guide
30 Jan 2017
Investors rattled by Trump’s curbs - AM Briefing
30 Jan 2017
Dow holds above 20,000 as dollar firms - AM Briefing
27 Jan 2017
Dow breaks above 20,000 - Video Update
26 Jan 2017
Dow at 20,000 boosts risk appetite - AM Briefing
26 Jan 2017
Dow finally breaks 20,000 - PM Bulletin
25 Jan 2017
Wall Street leads stocks higher - AM Briefing
25 Jan 2017
Consolidation continues - Video Update
24 Jan 2017
Dollar recovery helps lift sentiment - AM Briefing
24 Jan 2017
Money management and stop-losses -Trading Guide
23 Jan 2017
Stocks fall on US protectionism fears - AM Briefing
23 Jan 2017
Trump inauguration in focus - AM Briefing
20 Jan 2017
A look-ahead to Trump’s inauguration - Video Update
19 Jan 2017
ECB President Draghi’s press conference in focus - AM Briefing
19 Jan 2017
Dollar steadies after sell-off - Video Update
18 Jan 2017
Equities drift in featureless trade - AM Briefing
18 Jan 2017
Dollar pull-back lifts precious metals- PM Bulletin
17 Jan 2017
Dollar slumps in early trade - AM Briefing
17 Jan 2017
Charting analysis for beginners - Trading Guide
16 Jan 2017
Sterling slumps on “Hard Brexit” concerns - AM Briefing
16 Jan 2017
Earnings in focus - AM Briefing
13 Jan 2017
Fourth quarter earnings in focus - Video Update
12 Jan 2017
Market Info Update: Martin Luther King Day Monday 16th January 2017
12 Jan 2017
Dollar lower as Trump skips stimulus talk - AM Briefing
12 Jan 2017
Trump news conference - Video Update
11 Jan 2017
Trump press conference in focus - AM Briefing
11 Jan 2017
Has gold turned a corner? - PM Bulletin
10 Jan 2017
Another mixed start for Europe - AM Briefing
10 Jan 2017
Trading Psychology - Trading Guides
09 Jan 2017
Sterling slips on "Hard Brexit" fears - AM Briefing
09 Jan 2017
Non-Farm Payrolls in focus - AM Briefing
06 Jan 2017
Non-Farm Payroll look-ahead - Video Update
05 Jan 2017
FOMC minutes viewed as hawkish - AM Briefing
05 Jan 2017
Look-ahead to release of FOMC minutes - Video Update
04 Jan 2017
FOMC minutes in focus - AM Briefing
04 Jan 2017
Strong start to 2017 - PM Bulletin
03 Jan 2017
Equities push higher in first session of 2017 - AM Briefing
03 Jan 2017
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)
 
 
 Tuesday 03 January 2017

Strong start to 2017 - PM Bulletin

 

 

We’re experiencing a positive start to the year as far as equity markets are concerned. The FTSE100 is set to close at a fresh all-time high while the major US indices remain within a few points of their own record closes. This is certainly a big contrast to the beginning of 2016. This time last year equity markets began a sell-off which saw the S&P500 lose over 10% in little more than a month. Back then this was seen as a portent of bad things to come for global equities. Yet the S&P500 made back all its early losses and managed to end the year up over 8%. This was despite such political upheavals as the UK’s vote to leave the EU, Trump’s victory in the US presidential election and the resignation of Italian Prime Minister Matteo Renzi following his inability to win his own referendum on constitutional reform. Yet we managed to muddle through as far as the global economy was concerned. Investors even felt confident enough to take the Fed’s December rate hike in their stride.

But the big question now is if investors will be prepared to pile in further at current levels and drive the world’s major stock indices to new highs? Psychologically, it’s difficult to buy equities when they have risen so much already. Yet there’s also the worry of missing out on further gains. Certainly, as investors managed to climb the wall of worry from last year it feels as if there’s little to hold them back now. It does seem as if the US economy has turned a corner and a number of analysts are convinced that the Trump presidency will prove to be a game-changer. After all, there’s now a businessman in charge at the White House rather than a politician, and Trump has promised to cut taxes, boost infrastructure and defence spending and slash regulations. While there will be losers as well as winners, overall this should be good for the US economy. Whether this feeds through to the rest of us is another matter.

But there are concerns as well. At the Fed’s meeting last month when the central bank hiked rates for the first time in a year, Janet Yellen was asked if she was concerned about the risk of the economy overheating should Trump manage to push through tax cuts and stimulus spending. She said there was no obvious need for such stimulus as the US employment situation has improved recently. In mitigation she also said that such stimulus could help productivity. But Dr Yellen’s reply does suggest that Trump’s campaign promises (assuming they get through Congress) could raise inflation expectations - especially at the Fed. If investors come to feel that the central bank is prepared to raise rates more aggressively than expected, then that could be a big headwind for equities, especially as all of Trump’s policy proposals will add to US national debt. This hasn’t been viewed as an issue thanks to record low interest rates. But if these now start to rise, we could have a problem.




Disclaimer: 
Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

 

Posted by David Morrison

Tagged: Bulletin PM

Category: PM Bulletin


Add a comment Add comment            

 

 
© 2017 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.