Singapore - US stock futures pared
gains on Wednesday on disappointment that President Donald Trump
did not offer further details on his plans for infrastructure
spending and tax reforms, but the dollar firmed on growing
expectations of a rate hike this month.
European stock markets were poised for a positive start,
with financial spreadbetters expecting Britain's FTSE 100 and
Germany's DAX to open 0.2 percent higher, and France's CAC 40 to
start the day up 0.3 percent.
Trump pledged to overhaul the immigration system, improve
jobs and wages for Americans and promised "massive" tax relief
to the middle class and tax cuts for companies, but offered few
clues on how they would be achieved.
"Investors had little to grasp, and market reaction during
the speech was choppy and directionless," market strategists
Paul Christopher, Scott Wren and Sameer Samana at Wells Fargo
Investment Institute in St. Louis said.
"The speech was short on details and did not even prioritize
the president’s goals."
Capital Economics' Paul Ashworth said Trump has been
struggling to implement his agenda.
"With Congress getting bogged down by Republican infighting
over efforts to repeal and replace existing health care
legislation, it will take considerably longer to pass tax reform
than we initially thought on election night," Ashworth said in a
note.
"There is now a good chance that it won't happen until early
next year."
US stock futures still pointed to a higher open after
Trump's address, though gains shrank as the speech progressed.
Snapping streak
E-mini S&P futures edged up 0.2 percent, after the Dow
Jones Industrial Average snapped a 12-day winning streak
to close down 0.1 percent in the prior session.
The dollar index, which tracks the greenback against
a basket of trade-weighted peers, advanced 0.5 percent to 101.58
after wobbling during the speech.
The US currency also rebounded against the yen, rising
more than 0.6 percent to 113.47 yen, after erasing its session
gains during Trump's speech.
Reaction in Asian stock markets to Trump's speech was
largely muted, with the MSCI's broadest index of Asia-Pacific
shares outside Japan down about 0.2 percent.
A raft of surveys pointing to stronger factory activity in
China, Japan and other parts of the region were largely
overshadowed by Trump's speech.
"The market has been looking for reassurance that Trump
intends to follow through on his campaign promises for fiscal
spending, tax cuts and deregulation," said James Woods, global
investment analyst at Rivkin in Sydney.
"He mentioned these policies but did not provide any actual
details or time lines, which is what investors are looking for."
"However, in particular I think his rhetoric has been toned
down around protectionism when mentioning China and Mexico,
easing concerns around trade wars."
Markets took note of that shift, with the Mexican peso
trading higher after Trump's speech, although it inched lower
later in the session. While still pledging to build a wall on
the US's border with Mexico, Trump made no mention of his
earlier promises to make the latter pay for it.
The dollar gained 0.1 percent to 20.116 pesos.
In Asia, Chinese stocks advanced 0.2 percent after
the stronger-than expected factory readings.
Japan's Nikkei extended gains to close up 1.4
percent, buoyed by a weaker yen and data showing manufacturing
activity expanded in February at the fastest pace in almost
three years.
Australian shares narrowed earlier losses to end the day 0.1
percent lower and the Australian dollar edged up 0.1 percent to
$0.7666 after stronger-than-expected GDP data showed the economy
had returned to growth in the fourth quarter.
Treasury yields, which had jumped after Fed officials
suggested an interest rate rise might be delivered later this
month, hovered slightly below that level after Trump's speech.
US 2-year Treasury yields were at 1.2961 after
Trump's speech, after touching 1.304, their highest level since
December 15, earlier in the session.
New York Fed President William Dudley, among the most
influential U.S. central bankers, said overnight on CNN that the
case for tightening monetary policy "has become a lot more
compelling" since Trump's election.
US 10-year Treasury yields rose to 2.4132
percent, after touching a session high of 2.426.
Traders now see a better than 62 percent chance of a rate
increase in March, a surge from 31 percent earlier, according to
CME Group's FedWatch tool.
The sharp shift came despite disappointing US fourth-quarter gross domestic product growth, as downward
revisions to business and government investment offset robust
consumer spending.
Data releases later in the session include German
unemployment for February, and U.S. personal consumption
expenditure, inflation and manufacturing activity.
In commodities, oil prices inched higher as supply cuts by
the Organization of Petroleum Exporting Countries offset
concerns about rising U.S. crude inventories.
US crude rose almost 0.1 percent to $54.07 a
barrel. Global benchmark Brent jumped 1.9 percent to
$56.63.
The stronger dollar weighed on gold, which dropped
0.3 percent to 1 244.36 an ounce, extending Tuesday's 0.3
percent decline.