UK and US markets outperform Europe
Donald Trump’s promise of a “phenomenal” tax plan to be unveiled soon has sent most markets higher for the second day, outweighing any worries from Fitch’s assessment of the US president as a risk to the global economy.
There has been some divergence, with the US markets hitting new peaks and the UK outperforming European markets, amid worries about Greece and the forthcoming elections in France, the Netherlands and Germany. The final scores showed:
- The FTSE 100 finished up 0.4% or 29.25 points at 7258.75, boosted by mining shares as metal prices rallied after positive Chinese trade data
- Germany’s Dax rose 0.21% to 11,666.97
- France’s Cac closed up 0.04% at 4828.32
- Italy’s FTSE MIB fell 0.45% to 18,862.11
- Spain’s Ibex ended down 0.64% at 9378.1
- In Greece, the Athens market added 2.46% to 623.79 as creditor meetings continued
On Wall Street the Dow Jones Industrial Average is currently up 89 points or 0.45%.
On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back next week.
More on Greece from Helena Smith:
Its official: #Greek gov sources saying they are not expecting decisive breakthrough in @tsakalotos meeting w creditor reps today
— Helena Smith (@HelenaSmithGDN) February 10, 2017
Since Greek #debt crisis began success govs hv expressed "optimism" re deadlock w creditors but cycle of drama has proved its rarely tt easy
— Helena Smith (@HelenaSmithGDN) February 10, 2017
After #ECB's Ewald Nowotny's remarks quite clear tt #Greek crisis rooted as much in disagreement over role of #IMF as Gk reluctance 2 reform
— Helena Smith (@HelenaSmithGDN) February 10, 2017
No justification for IMF to be in Greek deal - ECB's Nowotny
There is no reason why the IMF should be part of the Greek rescue deal, according to ECB member and president of the National Bank of Austria, Ewald Nowotny.
Germany has said the IMF must be part of the Greek solution, but in an interview with Der Standard (in German), Nowotny said:
I do not understand why at the EU level one insists that the fund is on board. This would only be an additional complication, which does not contribute to the solution of the problem.
There is neither economic nor political justification. Greece is a European problem, and Europe will solve it. I fear, politicians deliberately create a crisis scenario, the solution of which is uncertain. Because we do not know the role of the IMF under the influence of Trump’s United States.
ECB's Nowotny: No political nor economic justification for the IMF to be part of Greek rescue --Der Standard
— rens_beck (@rens_beck) February 10, 2017
So, if the next financial crisis comes, where could it start? Perhaps with car loans. Patrick Collinson reports:
A huge increase in the amounts borrowed by already indebted households in Britain and the US to buy new vehicles is fuelling fears that “sub-prime cars” could ignite the next financial crash.
British households borrowed a record £31.6bn in 2016 to buy cars, up 12% on the year before, said the Finance and Leasing Association on Friday. Nine out of 10 private car buyers are now using personal contract plans (known as PCPs), which have boomed since interest rates fell to historic lows.
Under these cheap leasing deals, buyers pay a small deposit and then commit to making a monthly payment for the next three years with the option to buy or hand back the car at the end. The rise of PCPs helps to explain rocketing car sales in Britain despite flat or falling household incomes. A record 2.7m new cars were sold in Britain last year – the fifth year in a row of rising sales. Per head, the British are buying more new cars than any other large country in Europe.
Car financing in the UK is a “flashing light”, according to Andrew Evans, a fund manager at investment firm Schroders. “Borrowing is a very bad idea when it is done against a depreciating asset … such as a car,” he said, adding that there was a “serious level of fragility built into the system”.
The full story is here:
Markets continue to move higher, more so in the US and UK than in Europe, where investors worry about Greece’s debt problems and the uncertainty over the forthcoming elections in France, the Netherlands and Germany.
With the Dow Jones Industrial Average, S&P 500 and Nasdaq all hitting new peaks on the back of Trump’s promised tax reforms, Chris Beauchamp, chief market analyst at IG, said:
The final session of the week confirms that the bulls are in charge once again. Yet more record highs for the Dow, S&P 500 and Nasdaq 100 all point to a re-energised rally for stock markets, and while there has been a modest intraday wobble, this has simply provided a fresh chance for some new buyers to hop on board. Investors looked like they had fallen out of love with mining stocks earlier this week, but it appears this too was just a brief period of disillusionment and now the romance is back on... Earnings season is beginning to wind down in the US, but overall the period has not seen any major surprises, and the promise of a Trump tax plan seems perfectly calculated to keep markets on the front foot.
Just in case you thought the latest Greek drama might threaten to come to an early resolution:
Meeting btw institutions + @tsakalotos has started "no deal is expected today" say both Greek and EU officials.
— Eleni Varvitsiotis (@Elbarbie) February 10, 2017
Greek official: No bailout deal expected in meeting today
— Livesquawk (@Livesquawk) February 10, 2017
- Brussels meeting shouldn't be dramatised
Updated
On the NIESR data, Paul Sirani, chief market analyst at Xtrade, said:
The NIESR’s latest estimate suggests UK economic output accelerated impressively during the three months ending in January, in what is the latest sign of a resilient UK economy.
The post-Brexit Armageddon predicted by so many is still absent, with consistent growth since June’s votes leaving economists eating humble pie for now.
However, a period of uncertainty is imminent. Prime Minister Theresa May has the mandate to trigger Article 50 in the coming weeks and forecasts predict GDP will enter a downwards spiral in 2017. The Brexit-hit pound is expected to drive inflation and could squeeze consumer spending.
UK economy grew 0.7% in three months to January - NIESR
Back with the UK, and more signs of improvement in the country’s economy after better than expected trade, construction and manufacturing figures earlier.
In the three months to the end of January, the economy grew by 0.7%, according to the National Institute of Economic and Social Research. This compares to a figure of 0.6% in the three months to the end of December. Oriol Carreras, research fellow at NIESR, said:
Growth was driven by robust consumer spending combined with a pickup in output in production industries. This represents the first expansion of production, on a three month on three month rolling basis, since September 2016. Despite our estimates indicating a strong start of 2017, we expect economic growth to soften to 1.7 per cent this year as rising consumer price inflation weighs on consumer spending.
At the start of this month, NIESR forecast that GDP grew by 2% in 2016 and 1.7% in 2017.
Updated
US consumer confidence falls
It seems US consumers are not as confident as had been expected, with Donald Trump’s economic policies (not surprsingly) dominating sentiment.
The preliminary University of Michigan consumer sentiment index for February came in at 95.7, compared to forecasts of 97.9 and January’s final figure of 98.5. The survey’s chief economist Richard Curtin said this could be an early sign for concern about future consumer spending patterns:
Consumer confidence retreated from the decade-peak recorded in January, with the decline centered in the Expectations Index. To be sure, confidence remains quite favorable, with only five higher readings in the past decade.
Importantly, the data do not reflect any closing of the partisan divide. The Michigan survey includes several free-response questions which ask respondents to answer in their own words, without any prompting or proposed answer categories. When asked to describe any recent news that they had heard about the economy, 30% spontaneously mentioned some favorable aspect of Trump’s policies, and 29% unfavorably referred to Trump’s economic policies.
Thus a total of nearly six-in-ten consumers made a positive or negative mention of government policies. In the long history of the surveys, this total had never reached even half that amount, except for five surveys in 2013 and 2014 that were solely dominated by negative references to the debt and fiscal cliff crises.
Moreover, never before have these spontaneous references to economic policies had such a large impact on the Sentiment Index: a difference of 37 Index points between those that referred to favorable and unfavorable policies.
These differences are troublesome: the Democrat’s Expectations Index is close to its historic low (indicating recession) and the Republican’s Expectations Index is near its historic high (indicating expansion). While currently distorted by partisanship, the best bet is that the gap will narrow to match a more moderate pace of growth. Nonetheless, it has been long known that negative rather than positive expectations are more influential in determining spending, so forecasts of consumer expenditures must take into account a higher likelihood of asymmetric downside risks.
Dow hits new peak as Wall Street opens
Investors appear to be shrugging off the warnings from Fitch that Donald Trump poses a risk to the global economy. Instead they are still concentrating on the prospect of further stimulus measures after the president promised “phenomenal” news on tax reforms in the next few weeks.
So the Dow Jones Industrial Average hit a new record of 20,232 in early trading, before slipping back to 20,230, still up 58 points or 0.29%. The S&P 500 and Nasdaq Composite also opened at new highs.
EU commissioner hints EU could go it alone on Greece
More from Valdis Dombrovskis, the EU commissioner responsible for financial stability, financial services and capital markets union, currently on a visit to London.
He hinted in a Q&A session after his speech at Bloomberg’s London HQ that the EU could go it alone on Greece should the IMF quit the scene. Our economics correspondent Phillip Inman was there. He says:
Dombrovskis said all parties were close to pressing the button on the next phase of bail out cash for Athens even though the IMF’s forecasts for Greek growth and therefore public sector spending surplus were much lower than the EU’s.
Nevertheless, he said that the European Stability Mechanism, which has lent €174bn to Greece, has a rulebook and this stresses that it is only preferable and not necessary for parties other than the ESM and European Central Bank to be involved in any rescue.
Many executives at the IMF believe Greece cannot hope to repay its debts while the economy remains flat on its back. It is considering whether to pull out of a joint rescue with the EU.
By focussing on the rulebook in his answer, Dombrovskis is giving a clear hint that Brussels is prepared to impose a deal on Athens with the ECB and wave goodbye to the IMF.
Fitch says the countries most at risk of a sovereign downgrade are those “with close economic and financial ties with the US that come under scrutiny due to either existing financial imbalances or perceptions of unfair frameworks or practices that govern their bilateral relations”.
So that’s Canada, China, Germany, Japan and Mexico for starters, “but the list is unlikely to end there,” Fitch warns.
Fitch: Trump poses a risk to global economy
Fitch has just issued a warning that President Trump poses a risk to the global economy, raising the prospect that countries will suffer a rating downgrade.
The ratings agency highlighted Trump’s unpredictability, trade relations, limits on migration, and rows between policymakers as areas of concern:
The Trump Administration represents a risk to international economic conditions and global sovereign credit fundamentals. US policy predictability has diminished, with established international communication channels and relationship norms being set aside and raising the prospect of sudden, unanticipated changes in US policies with potential global implications.
The primary risks to sovereign credits include the possibility of disruptive changes to trade relations, diminished international capital flows, limits on migration that affect remittances and confrontational exchanges between policymakers that contribute to heightened or prolonged currency and other financial market volatility.
The materialisation of these risks would provide an unfavourable backdrop for economic growth, putting pressure on public finances that may have rating implications for some sovereigns. Increases in the cost or reductions in the availability of external financing, particularly if accompanied by currency depreciation, could also affect ratings.
Fitch does say that elements of Trump’s economic agenda would be positive for growth, including his pledge to spend more on US infrastructure.
Updated
Varoufakis: Grexit is a football kicked between Merkel and Schäuble
Yanis Varoufakis, Greece’s former finance minister, has been talking to Helena Smith, our correspondent in Athens. She reports:
“Greece is being pressurised yet again to extend and deepen its crisis and become even more unreformable just because the creditors cannot agree with one another on how to deal with the mess they created in 2010,” Varoufakis said, referring to the €110bn Athens received in the form of a first bailout.
“India under the British Empire had more power than Greece has today under the third memorandum of understanding (bailout).
Varoufakis said the rescue remedies Greece was being forced to follow was tantamount to giving “cortisone to a cancer patient.” The crisis, if snuffed out this time, would be reignited as soon as debt repayments matured again. “Follow the money,” he quipped. “Greece’s position in the eurozone is impossible without debt restructuring. “
“Grexit is a football being kicked around between [the German finance minister] Dr Schauble and [the German Chacellor] Mrs Merkel. Schauble is determined to kick Greece out and Merkel is determined not to make a decision until she really must,” Varoufakis said.
Updated
EU commissioner warns on UK trade deals post-Brexit
Valdis Dombrovskis, the EU commissioner responsible for financial stability, financial services and capital markets union, is on a visit to London, and has taken a more sophisticated route to issuing the UK with threats of economic disaster. Phillip Inman reports:
In line with other senior Brussels officials, who appear to be less bombastic about the threat to Britain’s economy from Brexit, Dombrovskis said that the EU will always be welcoming to British businesses and sees no threat to London’s standing as an international financial centre.
But he warned that a failure to stay aligned with EU rules will make it increasingly difficult for Brussels to negotiate a deal with low tariff trade barriers and for low tariff trade to remain in place.
Speaking at Bloomberg’s London offices about “Accelerating the Capital Markets Union”, he said:
Far from being held back by international rules and standards agreed in the last decade – London has been thriving. And regardless of the UK’s future relationship with the EU, London will only continue to thrive on the basis of a strong international system.
The sting in the tail came with the comment:
We very much hope to continue working with all our partners internationally, but this is not only in our hands. What is in the hands of the EU, is to preserve recent reforms and firmly uphold our prudential framework. […]
He said equivalence was an important concept and the more the UK failed to meet requiremrents for equivalence, the less access it will have:
Based on strong common international cooperation, the EU has been very open to recognise that our international partners’ rules are equivalent and achieve the same objective as ours. But these findings depend very much on the specific conditions of individual sectors and country at the time when the decisions are made. If these conditions change, we will have to reassess the situation.
The clear warning is that if the UK adopts practices and rules that are not part of the EU system now or at any point in the future by signing trade deals with the US and other countries, then the EU will become closed to UK business.
He said the EU will fight to develop and maintain common rules for global financial stability.
But speeding up the creation of the Capital Markets Union is a priority and if London refuses to tag along, the EU will rely increasingly on its own capital markets. He said:
We are also moving ahead with work to build a single market for capital, a Capital Markets Union. […] We want to quicken the pace on existing work, such as measures to make business restructuring easier and plans to build a pan European private pensions market. Also to be more ambitious in the areas such as Fintech and sustainable finance. […] The prospect of Europe’s largest financial centre leaving the single market makes our task more challenging, but all the more important.
Updated
Greek borrowing costs fall as hope build of a deal
Greece’s borrowing costs have fallen sharply as optimism rises that progress will be made on debt talks with its EU creditors.
Two-year Greek government bond yields fell more than 110 basis points to 8.8%, moving away from seven-month highs above 10% earlier this weeks.
Lyn Graham-Taylor, senior rates strategy for Dutch bank Rabobank:
There seems to be a high degree of will to put this issue to bed prior to elections in the eurozone.
Greece's Europe minister: Germany's Schäuble is 'isolated' voice
Greece’s Europe minister, George Katrougalos, has expressed confidence that a deal will be struck between Athens and its creditors to unlock a further wave of funding.
He told journalists on Thursday:
I am optimistic that we can have such an agreement before the Eurogroup of 20 February.
If we had just to deal with the Europeans we would have already completed this review in December. All the delay is due to the ambivalence of the IMF to participate or not to participate .
He dismissed comments by the German finance minister, Wolfgang Schäuble, who said Greece must implement reforms or leave the eurozone.
Katrougalos commented:
Mr Schäuble is now an isolated voice in Europe, one of the last defenders of austerity.
Greek shares rise on hopes of a breakthrough in talks
The market is Athens is up 3% as investors appear to be hopeful of a breakthrough between the Greek government and its European creditors.
Reuters is reporting that Greece’s eurozone lenders and the International Monetary Fund have reached an agreement on a common stance they will present to Greece, following a rift earlier in the week.
The news agency quotes an unnamed senior eurozone official:
“There is agreement to present a united front to the Greeks,” the euro zone official said, adding that the outcome of Friday’s meeting with the Greeks was still unclear and it was unclear if Athens would accept the proposals.
“What comes out of it, we will see,” the official said.
A united stance among euro zone governments and the IMF is a breakthrough because they have differed for months on the size of the primary surplus Greece should reach in 2018 and maintain for years later as well as the issue of debt relief.
Those differences have hindered efforts to unlock further funding for Greece under its latest euro zone bailout program.
Greek finance minister holds urgent talks in Brussels
Turning to Greece, finance minister Euclid Tsakalotos has urgently flown to Brussels in an attempt to end the deadlock in stalled talks between the country and its EU-led creditors. Our correspondent Helena Smith reports from Athens:
In a last ditch effort to break the deadlock that has once again ignited fears of a new Greek crisis – and default by the summer – finance minister Euclid Tsakalotos has rushed to Brussels for a meeting with the heads of the creditor institutions.
Speculation is rife that the Oxford-educated Tsakalotos is prepared to make what the Greek media this morning are describing as the “big compromise” in order to clinch a “technical” agreement with lenders before euro area finance minister hold their monthly Eurogroup session on 20 February. If sealed, auditors would return to Athens next week in the hopes of finally concluding the compliance review at the heart of the impasse.
Tsakalotos is expected to be presented with an alternative set of measures that Athens’ leftist-led government could put its signature to in time for a deal to be reached before Europe goes into election mode, starting with polls in the Netherlands next month.
The proposal, to be presented to the minister this afternoon, is believed to be more palatable in that the government would not have to legislate contingency measures (not least tax increases and pension cuts) before the country’s current bailout expires in the summer of 2018. The cuts are thought to amount to 2 percent of Greek gross domestic product and would only be implemented if Athens fails to meet the budget targets agreed under its latest bailout.
If true, the face-saving formula may avert the spectre of bankruptcy this summer when Greek faces a €7bn debt repayment in July, but is unlikely to resolve the lingering problem of Greece’s mountainous debt or go down well with many in the ruling Syriza party who have become increasingly restive at the prospect of inflicting yet more measures on austerity-whipped Greeks.
Updated
So far Friday has been a day of forecast-beating data from China and the UK.
But investor sentiment is underpinned by comments from President Trump, whose every word is closely scrutinised. He dangled a big carrot on Thursday, promising to reveal “phenomenal” tax plans within a matter of two or three weeks.
Sean Spicer, White House spokesman, elaborated on Trump’s comments, suggesting the biggest overhaul in US personal and business taxes since President Reagan’s Tax Reform Act of 1986.
[It’s going to be] a comprehensive plan, something we haven’t seen since 1986 ... It’s going to recognize the need to give so many working Americans the relief that they need.
What he wants to do is create a tax climate that not only keeps jobs here but incentivizes companies to want to come here, to grow here, to create jobs here, to bring their profits back here.
UK growth 'could be revised up to 0.7%' for Q4 2016
“It’s a boom!”
So says Scotiabank economist Alan Clarke about the flurry of decent UK data today on trade, manufacturing and construction in December.
He says GDP data for the fourth quarter could be revised to show the economy grew by 0.7% between October and December, and not 0.6% as first estimated by the ONS last month.
Clarke explains:
Yes these are backwards looking since they relate to December. BUT the preliminary Q4 GDP data had made assumptions for how these would perform and those assumptions were far too pessimistic.
The punchline is that other things equal, this points to Q4 GDP being revised UP to 0.7% quarter-on-quarter.
We all thought the Bank of England were mad when they came out with a 2% growth forecast for this year. They may come out of this looking very smart.
Updated
Pound receives a boost from strong UK data
The pound has been given a slight boost by the forecast-beating UK data.
It is currently hovering just above the $1.25 mark. Sterling is also up 0.2% against the euro at €1.1742.
Scott Bowman, UK economist at Capital Economics, says the ONS data suggests growth is becoming more balanced.
Today’s UK economic activity data added to other evidence suggesting that the economy maintained a significant amount of momentum at the end of 2016 and implies that growth is becoming more balanced.
The December output figures do provide a base for more balanced growth in 2017. Indeed, we think that the expansion in manufacturing activity will exceed that in services for the first time since 2011, as the manufacturing sector gets a competitive boost from the fall in the pound, but consumer services growth is constrained by rising inflation.
Growth in the UK has been heavily on Britain’s consumers since the financial crisis. Services is the only main sector of the UK economy where output has surpassed pre-crisis levels. Manufacturing and construction has lagged.
Kate Davies, senior statistician at the ONS, is commenting on the UK data. She says there is no evidence that a weaker pound is having an impact on trade:
The UK trade deficit narrowed to £8.6 billion in the final quarter of 2016 as exports of products including oil and aircraft to non-EU countries increased. There was also a notable increase in export sales of gold to overseas buyers. While both exports and imports grew over 2016, there remains little evidence that the weaker pound has had an effect on the trade balance.
Industrial output and the construction sector both remained broadly flat over the final quarter of 2016 but grew in December, with manufacturing growth driven by a strong month for often volatile pharmaceuticals and the expansion in construction led by house and commercial building.
UK data beats forecasts
The UK economy was in better-than-expected shape in December according to the latest data from the Office for National Statistics.
A quick summary:
- The trade in goods deficit narrowed to £10.9bn from £11.6bn in November (itself revised down from £12.2bn)
- Industrial output rose 1.1% following 2% growth in November
- Manufacturing output jumped 2.1% from 1.4% in November
- Construction output was up 1.8%, following 0.4% growth previously
No sign of a Brexit slowdown here..
Updated
Just Eat shares fall 6% as chief executive resigns
Just Eat fell 6%, making it the biggest FTSE 250 faller, after chief executive David Buttress said he was stepping down.
The online takeaway ordering service said Buttress was leaving the top job because of “urgent family matters”.
He will work full time until the end of the first quarter when the chairman John Hughes will take over until a replacement is found.
Buttress will stay on at the company as a non-executive director for a least a year. He said:
It has been a great privilege to work alongside, and then lead, the exceptional team at Just Eat, helping to build the business from the very first restaurant in the UK to the company it is today.
I would like to thank the board for their understanding, and I am very pleased that I will be able to continue to play a role in the future of the business as a non-executive director. This has been one of the best jobs in the world, and I wish my successor all the best when they take on the role.
Hughes said Buttress had been “an incredible leader and colleague”, who was leaving the business in “excellent health”.
Coming up in less than half an hour we have a flurry of data from the UK’s Office for National Statistics.
- The trade in goods deficit is expected to narrow slightly to £11.5bn in December from £12.2bn.
- Growth in industrial output is expected to slow to 0.2% in December from 2.1% rise in November.
- Manufacturing output growth is forecast to slow to 0.5%, following a 1.3 increase previously.
- Construction output is expected to rise 1% in December, following a 0.2% drop in November.
Connor Campbell, financial analyst at Spreadex, says the data will be a “test” for the FTSE.
The miners are the FTSE 100’s top risers this morning, helped by the strong Chinese trade data which suggested global demand was in decent shape at the start of the year.
FTSE rises in early trading
The FTSE 100 is up 4o points or 0.6% in early trading, at 7,270.
Markets elsewhere in Europe are also higher, with the exception of Italy’s FTSE MIB. There are fresh fears surrounding Italy’s Banca Monte dei Paschi di Siena, after losses widened in the fourth quarter.
The scores so far:
- Germany’s DAX: +0.5% at 11,698
- France’s CAC: +0.3% at 4,842
- Italy’s FTSE MIB: -0.3% at 18,892
- Spain’s IBEX: +0.2% at 9,455
- Europe’s STOXX 600: +0.3% at 368
China's exports jump in January
Strong trade data from China is also giving investors that Friday feeling.
Exports rose 7.9% in January, easily beating analysts’ expectations and following a 6.1% drop in January.
Imports rose by 16.7%, also beating forecasts.
It pushed China’s trade surplus to $51.35bn for the month, the General Administration of Customs said, from $40.71bn in December. China’s swelling trade surplus is unlikely to go unnoticed at the White House, where Trump has threatened to take a new protectionist stance to trade.
China’s trade surplus with the US was $21.37bn in January, slightly lower than the $21.73bn in December.
Economists cautioned that trends in January and February can be distorted by the long Chinese new year celebrations.
Julian Evans-Pritchard, China economist at Capital Economics, says:
These figures need to be taken with a pinch of salt as annual shifts in the timing of Chinese New Year make year-on-year trade growth highly volatile at the start of each year.
It’s likely that much of the pick-up last month was seasonal. Admittedly, the holiday took place earlier this year than last, meaning that more of the disruptions to trade will have fallen in January. But it appears that this was more than offset by the fact that, unlike last year, all of the pre-holiday rush to import goods and meet exports orders fell in January too.
Stepping back, the big picture is that Chinese trade values have been picking up in recent months thanks to a revival in global manufacturing, the continued strength of China’s domestic economy and the rebound in global commodity prices.
We expect this improvement to be sustained in the short-run, even as Chinese New Year distortions mean that headline trade growth is likely to fall back sharply in February.
The agenda: Markets boosted by Trump's tax pledge; pressure builds in Greece
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Asian markets have made strong gains following new record highs on Wall Street and a stronger dollar. The reason for this renewed investor optimism is the promise of more stimulus in the US.
Specifically, President Trump said he would be announcing “something phenomenal in terms of tax” over “the next two or three weeks.”
Vague, but enough to boost investors hooked on stimulus, as CMC Markets’ Michael Hewson explains:
The move to new record highs in equity markets and surge in the US dollar are symptomatic of a market craving a new stimulus. The risk is that as with most oases they turn out to be an illusion, and given the new President’s propensity for melodrama the risk is that this could well be no different.
It is hard to imagine that he will be able to promise anything tangible within a two to three week window, however whatever the realities investors appear happy to take him at his word, as US markets closed well above their previous peaks, while the US dollar index looks set to post its first positive week this year.
Investors might also be comforted by the more conciliatory note struck by the President with China, following his first conversation with President Xi Jinping since taking office.
In Asia, the Nikkei was up 2.5%, the Hang Seng up 0.4% and the Topix up 2.2% and the Shanghai Composite up 0.4%.
European markets are also expected to open higher:
Our European opening calls:$FTSE 7256 +0.37%
— IGSquawk (@IGSquawk) February 10, 2017
$DAX 11690 +0.40%
$CAC 4854 +0.58%$IBEX 9477 +0.41%$MIB 19026 +0.41%
We will also bring you all the latest developments from Greece, where the government is hoping to stave off a fresh debt crisis.
Updated
