US markets finally questioning whether pump from Trump is factored in

By Trevor Hoey. Published at Feb 23, 2017, in Features

The Dow started in negative territory before eking out a small gain with US markets sentiment somewhat jittery. Both the Fed Reserve and investors have given up trying to second-guess policy changes that may be on the horizon.

More importantly, there is recognition that tax cuts, the easing of regulatory burdens on the financial sector and job creation through government funded projects won’t necessarily materialise in the near term and the impact of such changes is difficult to quantify.

The NASDAQ also reflected this uncertainty, falling from the previous day’s close of 5865 points to hit a low of 5848 points before closing down approximately 0.1%.

The European region was more upbeat as Lloyds Banking Group plc announced a significant increase in profit. However, this was tempered by mixed economic data which pointed to declines in business investment and consumer spending.

However, the FTSE 100 finished in positive territory, gaining 0.4% to close at 7302 points.

The DAX and the Paris CAC 40 gained 0.3% and 0.2% respectively with the former once again pushing above the 12,000 point mark for the first time in nearly two years.

Notably, there was only a small window of about six weeks in March/April 2015 when the index traded above 12,000 points, a record at that time.

If faith in the manufacturing industry outweighs concerns over the Greek debt crisis and Brexit, the DAX could push up to the record high of approximately 12,400 points, which would arguably make it one of the most closely watched indices in coming months.

On the commodities front it was oil that took centre stage with a decline of approximately 1.4%.

Gold held relatively firm, clinging on to the US$1240 per ounce mark as US markets drew to a close.

Iron ore finished slightly lower and base metals were generally in the red.

The Australian dollar gained ground as uncertainty emerged in the US and it is now fetching just above US$0.77.

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