Dow Jones hits new high, FED hikes on horizon?
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Dow Jones hits new high, FED hikes on horizon?

Yesterday saw the Dow Jones Industrial Average jump by 300 points to hit 21,000 for the first time ever. The ‘Trump rally’ was back in full force, given a boost yesterday by Mr. Trump himself, who addressed congress on Monday. At this address, he did little to change people’s minds about his pro-growth agenda – and, although he did not provide the specifics that some of his critics have been hoping for, he obviously did enough to reassure the market.

The president reiterated his commitment to boosting public spending and slashing taxes, but offered precious little detail. That being the case, investors turned elsewhere for further clues to the future of the economy. Amongst these clues were a slew of economic data: U.S. manufacturing expanded last month at its fastest pace in three years; German inflation sped up above 2% for the first time since 2012; Chinese factory data looked strong.

However, the Federal Reserve (Fed) picked up Mr. Trump’s slack. According to Richard McGuire, Rabobank International’s (London) head of rates strategy, said Trump’s speech provided no “fresh content for the market to trade off, with big tax cuts, deregulation and an infrastructure plan being mentioned but not supported by any details. Given this, all focus instead turned to the slew of hawkish rhetoric from Fed speakers.”

With Fed chairperson Janet Yellen giving an address this Friday in Chicago on the economic outlook, investors won’t have long to wait for more news.

The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.

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