Waiting for Mr Trump
After the world-class gaffe at the Oscars, global markets are waiting to see whether Donald Trump’s State of the Union address stages a reprise.
After the world-class gaffe at the Oscars, global markets are waiting to see whether Donald Trump’s State of the Union address stages a reprise. Asian markets were down overnight as investors evaluated whether the Trump Administration would announce actions to crimp Asian imports into the US. European markets were flat, with financials the worst-performing sector in the Stoxx 600, followed by real estate and telecoms. Financials were also the worst-performing sectors in the TOPIX. Poor performance among financials, one of the top performers following the November US elections, reflects a modest reduction in risk on the part of equity investors.
French bonds were slightly better after a new poll showed a narrower lead for National Front challenger Marine Le Pen for the first round of the French elections in April. German polls overnight showed a strong lead for Social-Democratic candidate Martin Shulz, but also a majority expectation that Angela Merkel would win the election (probably true). Italian bonds were 5 basis points tighter after the slaughter of the past week. That reflects hedge fund profit-taking; every hedge fund in the world wants to be short on Italy, but is looking for the right level, and many took profits when the spread between Italian and German 10-year government bonds broke the 200-basis-ppoint mark. Italian stocks were mixed; the main event was Intesa San Paolo’s decision not to pursue a merger with insurer Assicurazioni Generali. Intesa was up, Generali down. — David Goldman