Global stocks were modestly lower despite upbeat earnings and economic data. Donald Trump was sworn in as President, with investors looking to his inaugural address for signs of policy priorities. As with all politicians, we remain cautious of rhetoric and prefer to judge policies once proposed and seen through to fruition (as so few policies generally are). Earnings season continued, with banks—which typically report earlier than others—so far reporting broadly stable core results.
British Prime Minister Theresa May provided some clarity on Brexit developments, namely regarding the mechanics and goals for passing a final deal. Though details were sparse, Parliament will vote on a finalized deal with the European Union, suggesting the agreement will likely have broad appeal. But it’s far too soon to know how negotiations play out—a process requiring years, not months. As expected, the European Central Bank (ECB) left interest rates and bond purchases unchanged, maintaining a dovish stance.
Chinese economic data was generally as expected—Q4 2016 GDP expanded 6.8%, bringing full-year growth to 6.7%, far from the “hard-landing” many have fretted for years.
President Trump’s first 100 days kick off, and investors will be eagerly dissecting policy pronouncements for market impact. Economic releases pick up next week—the US and UK release preliminary Q4 2016 GDP.