Trump promises tax cuts, improved jobs and wages for Americans - 1.3.2017

US stock indices record strong monthly gains

US stock indices pulled back on Tuesday as investors took a cautious stance ahead of Trump’s Congress speech. The dollar strengthened further after New York Fed President William Dudley’s comment the case for raising interest rates has become more compelling. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed 0.2% higher at 101.369. Dow Jones industrial average slipped 0.1% to 20812.24 led by Wall Mart and Nike shares. The S&P 500 lost 0.3% settling at 2363.64 with consumer-discretionary and industrial stocks weighing on the broad market index. The Nasdaq index fell 0.6% to 5825.44. All three benchmarks finished higher February for a fourth straight month with the Dow industrials up 4.9%, the S&P 500 up 3.7% and the Nasdaq gaining 3.8%.

The blue chip index snapped its streak of twelve consecutive record closes. President Trump provided no details on his policy plans in his Congress address, pledging to implement "massive" tax relief to the middle class and tax cuts for companies and to overhaul the immigration system, improve jobs and wages for Americans. The speech shed no light on president’s priorities or timelines for his policies. In economic news, the fourth-quarter GDP remained steady at 1.9% as trade deficit rose with consumer spending rebounding strongly. And the consumer confidence in February jumped to its highest level in 15 years, according to Conference Board. Today at 13:00 CET Mortgage applications will be released by the Mortgage Bankers’ Association in US. At 14:30 CET January Personal Consumption Expenditure will be published, the outlook is positive for dollar. At 16:00 CET February ISM Manufacturing PMI will come out, the outlook is positive. At the same time construction spending for January will be released, an increase is expected. At 19:00 CET Fed's Kaplan will speak on economic outlook in Dallas, Texas. And at 20:00 CET Federal Reserve will release the Beige Book.

Defense shares lead European stocks higher

European stocks closed marginally higher on Tuesday led by defense companies’ shares. Both the euro and British Pound weakened against the dollar. The Stoxx Europe 600 rose 0.2% with Germany’s DAX 30 adding 0.1% to 11834.41. France’s CAC 40 outperformed gaining 0.3% and UK’s FTSE 100 advanced 0.1% to 7263.44.

Defense stocks led the gainers, boosted by Trump’s comment on Monday his first budget proposal would include a “historic increase” in military spending. Shares of aerospace and defense company Meggitt rallied 13% on report the company also planned to raise its dividend. Thales shares gained 3.7% as the French defense electronics company said it expects profitability to rise this year on higher military spending globally, and BAE shares ended up 1.9%. Today at 09:55 CET German unemployment for February will be released, the tentative outlook is neutral for euro. At 10:30 CET February Manufacturing PMI will be published in UK, the outlook is negative for British Pound. And at 14:00 CET February consumer price index will be released in Germany, the tentative outlook is positive for euro.

Asian markets rise

Asian stocks are up today as investors were relieved President Trump’s Congress address contained no calls for protectionist measures. Nikkei gained 1.1% to 19519.44 as yen extended losses against the dollar and data showed manufacturing activity expanded in February at the fastest pace in almost three years. Chinese stocks are up after release of stronger than expected Manufacturing PMIs for February with both the Shanghai Composite Index and Hong Kong’s Hang Seng Index up 0.2%. Australia’s All Ordinaries Index is down 0.2% with the Australian dollar edging higher against the dollar on stronger-than-expected GDP reading.

Nikkei

Oil prices edge higher ahead of inventory data

Oil futures prices are edging higher today despite a 2.5 million barrels build in US stockpiles last week according to the report by the trade group the American Petroleum Institute. April Brent crude contract, which expired at the settlement, closed 0.6% lower at $55.59 a barrel on London’s ICE Futures exchange on Tuesday. It ended 0.8% lower for the month. Today at 16:30 CET the Energy Information Administration will release US Crude Oil Inventories.