The FTSE 100 is enjoying a strong move higher this morning with the blue-chip index up by more than 50 points. The pound is also slightly appreciating on balance with sterling showing sizeable gains against the New Zealand dollar and the Japanese yen
Trump rally looks set to continue
Leading into the build-up of US president Trump’s speech before both houses of Congress, there was a growing concern evident in certain markets that the proposed changes to fiscal policy would not be forthcoming. Whilst stock markets in New York continued to rise to previously unseen levels heading into the address there was a greater level of caution in both the fixed income space and the US dollar as to whether these plans would be implemented in full. This highly anticipated event in the early hours of this morning was actually far less dramatic than many had thought, but the reiteration of aiming to deliver a major tax reform alongside a $1 trillion infrastructure package saw stocks futures continue to rise out of hours, whilst the greenback rose on an increase in US government debt yields. The impact of this was clearly seen in the European open this morning with the FTSE rising strongly, whilst Germany’s leading benchmark has also rallied by more than a percent.
UK manufacturing continues strong recent run
The latest results from a survey of purchasing managers in the manufacturing sector indicates a continued level of strength with the PMI reading coming in at 54 - well above the 50 mark for the index which denotes an expansion/contraction. Whilst this was a slight miss on the 55.7 expected, which would’ve been in line with the prior reading, it is still fairly strong and adds to a run of 6 consecutive expansions. The coming days see the equivalent data point for construction and services scheduled to be released with Friday services number in particular potentially key to the pound.
Miners rise on Chinese data
The latest data from the Far East suggest that the world’s second largest economy is performing well and the heightened concerns surrounding a hard landing in China just over a year ago seem like a distant memory. A print of 51.7 in the Caixin manufacturing PMI release overnight has boosted stocks in London who are the most sensitive to the Chinese economy with the mining sector arguably the greatest beneficiary. BHP Billiton (LON:BLT), Glencore (LON:GLEN) and Anglo American (LON:AAL) are all higher by more than 2% on the day largely due to this news.At the other end of the index yesterday’s gains in Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) have been handed back as Gold futures have declined further since Trump’s speech.
Brexit bill to be defeated in Lords
The government is facing a first defeat in the House of Lords for its Brexit bill later today with an amendment to the draft legislation to protect the rights of EU citizens living in the UK expected to be agreed upon by peers. This could be seen as the first of several developments relating to the bill in which the Lords reject something in the red chamber and send it back down the corridors to the green benches. The upper house will be hoping that some backbenchers in the commons will join them and push back at the government, however this is unlikely to ultimately frustrate the process of triggering Article 50 to any great extent. Perhaps in light of this there’s little by the way of a discernible reaction seen in the markets as of yet.
P.S. In other, and arguably more important, news Newcastle have gone back to the top of the Championship after beating title rivals Brighton 2-1. The Rafa rally is showing little sign of abating.....