Shares rally again on Donald Trump’s pledge

European shares treaded water, while US stock indices boosted by tech deals and the election pledges of Donald continued to rally.

Mr Trump had pledged to spend $1 trillion (€944bn) on America’s creaking roads, airports, bridges, and water systems, as well as promising corporate tax reform that could lead to multinationals such as Apple formally repatriating to the US the billions they hold in huge cash piles.

In Dublin, CRH — which has benefited most of Irish-listed firms from the victory of Mr Trump — eased slightly.

Its shares have soared 8.8% since the November 8 election and are up 22% this year on hopes its major operations in the US can tap any huge increases in spending sanctioned by the new White House.

In London, the Ftse 100 was flat, with oil stocks which account for a significant slice of the index getting a boost from talk that the Opec deal at the end of the month will cap supply and increase prices next year.

“Hope springs eternal re the Opec agreement,” said Chris Beauchamp, senior analyst at online trader IG, with “oil now surging away, proving that it was unwise to write the obituaries for the 2016 rally in this commodity”.

Gold seemed poised to arrest its recent price fall, he said. Meanwhile, US shares received a further boost as brokers assessed just what the multinationals will spend the cash on should they bring their billions back to the US.

Companies in the S&P 500 Index will spend most of the cash hoard buying back stock next year, analysts at Goldman Sachs wrote in a new note. If so, it would be only the second time in the past 20 years buybacks have accounted for the largest share of cash usage.

Much of this, Goldman said, would be due to the enacting of plans president-elect Trump proposed, such as a tax holiday for overseas income and changes to the corporate tax code.

“A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004,” the team, led by chief US equity strategist David Kostin, wrote. They estimate $150bn (€141.6bn) will be driven by repatriated overseas cash.

Morgan Stanley said many are overestimating how much cash will be brought back. “The often cited $2.5tn statistic [of cash for repatriation] represents accumulated foreign earnings that companies have declared permanently reinvested abroad for GAAP accounting purposes,” they wrote.

“We estimate that only 40% of this amount, or roughly $1tn, is available in the form of cash and marketable securities.”