Weekly Market Update

04/12/2017

FTSE 100 stocks struggled last week as sterling strengthened on hopes that Brexit talks could be progressing. However, British manufacturing received a lift with the latest figures suggesting strong expansion in the sector. New orders for investment goods jumped at the quickest rate since 1994, and companies reported continuing support to exports from sterling weakness.

A second estimate of US third-quarter GDP showed that the US economy grew at a 3.3 per cent annualised rate. Data also highlighted that US consumer confidence surged to a near 17-year high in November, driven by a robust labour market, while house prices rose sharply in September in the latest encouraging reports about the US economy.

US markets hit new trading highs boosted by investors’ hopes that President Trump’s promised tax cuts were coming closer to fruition. Shares of financial companies also got a further boost after Jerome Powell defended the need to potentially lighten regulation on the financial sector in testimony before a Senate committee. Later Michael Flynn, a former Trump official, was charged with lying to the FBI over the Russian investigation, and talks surrounding impeachment rattled markets once move.

Donald Trump came a step closer to the first legislative victory of his presidency as Senate Republicans passed a historic bill in the early hours of Saturday to overhaul the US tax system. The core of the bill is a tax cut for corporations that takes their rates to the lowest level in decades, with more modest reductions for individual taxpayers. Party leaders see turning the tax package into law as vital to their chances of retaining control of Congress in mid-term elections next year.

OPEC and Russia agreed to prolong production cuts through to the end of 2018, in their fight against a global supply glut. However, its impact on oil prices was limited, tempered by news that the US expanded output to another record last week.

The value of bitcoin surged above $11,000 mark and has now risen more than 850 per cent since the start of the year. IG Group, the world’s largest online trading platform, had suspended trading of some of its bitcoin derivatives on Monday after roaring demand for the products left the company facing a high security risk. The price has been buoyed by last month’s decision by CME Group, the world’s largest exchange operator by market value, to launch bitcoin futures by the end of the year in response to demand from some of its biggest users. The move by a traditional market has helped give the cryptocurrency legitimacy in the eyes of some traders.

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