Global stocks rose on Monday with investors citing the re-emergence of a so-called Trump trade, spurred by the US President’s pledge to roll back regulation and reform taxes to bolster economic growth and job creation.
Around midday in London, the Stoxx Europe 600 benchmark index of top European shares was around 0.5 per cent higher, with indexes in Germany and France particularly rallying.
Futures contracts pointed to a stronger open on Wall Street too, after Friday’s record high close.
Earlier in the session Asian shares broadly ended the day higher, with some hitting their highest levels in over a year. The yen, commonly considered an investor safe haven during bouts of market uncertainty, fell on the day. The dollar index was little changed.
“It seems that [market] participants are back to believing in Donald Trump,” said Erik Nielsen, chief economist at UniCredit wrote in a note to clients over the weekend.
Last week Mr Trump said that he was on the verge of announcing the most ambitious tax reform since the Reagan-era.
Mr Trump promised a “phenomenal” tax plan during a meeting in the White House with airline executives, but has so far failed to spell out any details of his proposed reforms.
“Nothing [is] as appreciated these days as bombastic statements,” said Mr Nielsen. He also warned, however, that for market at least, the biggest downside risk is still Mr Trump.
“I’m now confident that he’ll deliver some sort of tax reform with tax cuts for firms and the wealthier sections of the population, but whether it’ll be “phenomenal” remains to be seen, of course,” Mr. Nielsen said.
In the aftermath of Mr Trump’s November election victory stock markets, especially in the US have surged, spurred by the New York businessman’s campaign promises.
Bank stocks enjoyed particularly sharp rises and the dollar rallied hard too, but in recent weeks moves have become somewhat more muted. Investors appear to be looking for proof that the rallies will be justified by hard policy action from the President.
