Dow rally encourages optimism in markets

The Dow continues to break higher, amid a feeling of optimism for US industry. Meanwhile, the Pounds rise reflects the innate strength in the markets that has become evident despite Brexit fears says Joshua Mahony, market analyst at IG.

Dow rally encourages optimism in markets

Markets are turning to riskier assets as we approach the back end of the week with the glee of yesterday’s 20,000 milestone for the Dow providing the basis for bullish moves across the financial markets.

Donald Trump joined in on the celebrations of yesterday’s 20,000 marker and to a large degree he is to thank for it coming to fruition. Despite the divisive nature of Trumps policies, markets have come to the realisation that money talks and, with many of his other policies coming to fruition, it seems a fiscal spending package is just around the corner.

UK GDP appears to be holding up nicely despite fears of a weaker showing amid the uncertainty of the impending Brexit. At each turn, it seems the UK economy manages to confound the naysayers yet, with article 50 likely to be enacted in March, it is clear that 2017 going to be an incredibly testing time for the UK.

Tomorrow sees Theresa May meet Trump, representing the first world leader to see the new President since his inauguration. After a period of negativity where a host of EU members talked down the economic future of the UK, it now sees we are seeing a more positive period, with the olive branch being extended by senior figures in nations such as Canada, US and Australia.

The rise we are seeing in the pound is a reference to the fact that perhaps the worst is over from a sentiment point of view and we are now seeing a focus on the benefits that could come from a Brexit.

Ahead of the open we expect the Dow Jones to open 49 points higher, at 20,117.


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