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President 'to go softer' on immigration

Dow leaps as Trump adopts moderate tone

Donald TrumpStock market investors drove Wall Street to a new high today after President Donald Trump adopted a softer tone on a series of policy issues.

The Dow Jones Industrial Average broke through the 21,000 mark for the first time as Mr Trump’s first address to a joint session of Congress reassured some investors who had been worried by his aggressive comments in recent weeks.

The benchmark US index was up more than 1% in afternoon trading at about 21,051 points. The FTSE 100 responded by adding 111 points near the close.

President Trump indicated he will soften his hardline policy on immigration in a speech that was hailed as his most statesman-like since he entered the White House.

Mr Trump told Congress that he was focused on the domestic agenda which would mean tax reforms, greater spending on infrastructure to fuel economic growth and more jobs.

He promised “massive” tax relief to the middle classes and tax cuts for companies and hinted at a change to his travel ban.

The markets initially gave his speech a lukewarm response for its lack of detail, although the dollar firmed on expectations of a rate hike this month.

One analyst said his speech was “choppy and directionless” and failed to prioritise his goals.

The Mexican peso traded higher and Chinese stocks rose 0.4%, but mainly on better domestic readings, while Japan’s Nikkei jumped 1.1% on the back of a weaker yen and data showing manufacturing activity expanded at its fastest pace in almost three years.

US crude rose almost 0.2% to $54.10 a barrel. Brent crude was 1.9% higher at $56.64.

Mr Trump also pledged to overhaul President Barack Obama’s healthcare law, known as Obamacare.

But his more measured comments on immigration hinted at a more restrained approach to policy following his controversial travel ban on people from seven Muslim-majority nations,

On foreign policy Mr Trump stressed his support for NATO and said: “America is willing to find new friends, and to forge new partnerships, where shared interests align.”

One commentator said this was the night Donald Trump began his presidency.

Nigel Green CEO of financial adviser DeVere Group said: “President Trump’s joint address had, in general terms, a Reagan-esque optimistic tone.  It was by far his best and most presidential speech to date.  It was almost as if tonight Trump became the President of the United States. 

“Overall, there was a positive, pro-business and pro-growth message that will please the markets. 

“However, there was a marked lack of detail on tax reforms, deregulation and infrastructure – three key areas for investors – and this could dampen the markets’ mood somewhat.

“The markets were hoping for a laundry list of facts on tax reform, deregulation and on stimulus. This didn’t happen and this will be a disappointment. Such cold, hard facts would have certainly maintained the post-election stock rally and expectations that the economy will get a further boost.”

He added: “Although Trump didn’t use the joint address to get into the details, it does not mean that the details are not coming imminently. Indeed, he said that his economic team is working on a ‘historic tax reform.’  The Trump administration has also previously said it is their goal to pass tax reform legislation by August.

“The lack of detail craved by the markets should not represent a major, longer-term obstacle to investors. 

“The financial markets like Trump and his economic pledges – we’ve seen this in how they have reacted so far to his stated policies – and a broad strokes speech such as this is unlikely to alter that in any meaningful way.

“Whilst some will, no doubt, bemoan the lack of specifics in Trump’s address, for many savvy investors it is precisely this lack of specifics that has been the cause of so much enthusiasm.”

“The markets might not have been given the details they wanted, but investors should react positively to Trump’s address.

“He seems determined to fulfil his election promise of shaking up the status quo.  From this shift there will be winners and losers, of course.

“For instance should Trump hold true to his election pledges, the banking sector is likely to do well due to the lifting of regulations, and mining and oil will get a boost the repeal of some the Obama-era environmental laws.

“In this new era, investors will need good fund managers who select investments that aim at the winning sectors, taking care to be diversified in their overall structures.”



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