Trump Pence promises not worth tuppence

After executives from some of the US’s largest manufacturing entities walked away from a meeting with President Trump extremely disillusioned the share prices of those companies started to tumble led by Caterpillar Inc (-2.8%), US Steel Corp (-7.3%) and Emerson Electric Company (-1.8%). Others to experience declines were Lockheed Martin and General Electric.

Reports are now surfacing that one of Trump’s key election promises, infrastructure spending, is now likely to face delays and there is even talk that the ground-breaking tax reforms aren’t as imminent as first expected.

This should have been an opportunity for Trump to build relationships with some of corporate America’s most powerful and influential corporate leaders, but similar to his discord on the political front there seems to be a greater focus on constructing walls than building bridges.

On the other hand, it may not be so much a sense of friction between the parties, but a realisation by those far more experienced than Trump in terms of executing on big projects that there isn’t enough evidence to indicate that Trump can deliver on his grand plans.

Despite the surrounding uncertainty and falls in a number of related sectors, the Dow spent most of the day in positive territory and its close of 20,800 points represented a gain of 0.1%.

However, it was a different story on the NASDAQ with the index falling 0.5% to finish at 5830 points.

Perhaps the uncertainty was best reflected in the sharp rally in the gold price which increase from the previous day’s close of US$1233 per ounce to hit a high of US$1252 per ounce before closing at the top end of that range.

Ironically, the last time the precious metal traded at this level was in the wake of election day.

Overseas markets were also unsettled with the FTSE 100 falling 0.4% to finish at 7271 points with Barclays plc and other banks placing a significant drag on the index.

The picture was no brighter in mainland Europe as the DAX fell 50 points or 0.4% to close at 11,947 points. The Paris CAC 40 was only slightly off, closing at 4891 points.

The oil price was volatile trading in a range between US$53.87 per barrel and US$54.94 per barrel before finishing at US$54.34 per barrel.

Australia’s mining companies are likely to take a significant hit when markets open on Friday morning following steep falls in iron ore (-3%) and most base metals.

Copper was down approximately 2.5%, while zinc and lead fell by approximately 2%. Nickel was the most resilient with its decline limited to 1.3%.

Another factor that will work against Australian miners is a strengthening in the Australian dollar which finished at US$0.772.