Stock markets have taken a breather while bond yields rose, as traders assessed the likely speed of US rate hikes under Donald Trump’s White House and awaited clues to future policies from the choices for his new cabinet team.
Sterling rose against the euro to 85.79p, helping relieve some of the pressure on firms here exporting across the Irish Sea. Sterling has now strengthened from around 89p on the eve of the US elections last week.
Speculation that the new White House team could include billionaire financier Wilbur Ross, who turns 79 this month, could become president Trump’s new commerce secretary.
Mr Ross is best known here for the many millions he made when he sold his stake in Bank of Ireland over two years ago.
“He is a highly-respected business figure” with international investments around the world, whose participation in the cabinet could help offset some of the protectionist tendencies of the new president, said Philip O’Sullivan, chief economist at Investec Ireland.
A Bank of America and Merrill Lynch survey showed most asset managers saw protectionism as the biggest risk to market stability.
Stocks, meanwhile, paused for breath “after the Trump romp”, said Josh Mahony, a senior analyst at online trader IG.
“Investors are evidently still cautious about the new administration, with the steady drip of news relating to appointments and the like keeping the market in check.
About the only thing still surging is the US dollar, which is now a hairs-breadth away from highs last seen in December 2015,” he said.
Shares in CRH, which have surged in the last week on hopes its American units would tap any new large US government spending on infrastructure, eased 2%, in Dublin.
In London, Rolls-Royce fell 3.6% as the maker of engines for military jets and ships said demand for its engines for extra-wide-body civil aircraft was strong, but business aviation had weakened further.
UK housebuilder Barratt fell 2.7% after it said it was having to cut the price of some of its most expensive London homes.
Separately, the rally for technology shares rolled on after focus fell on plans by Snapchat for an initial public offering in the US which may value the messaging app at up to $25bn (€23.2bn).
Mr O’Sullivan at Investec said that the recent rise of sterling may also ease the pressure on southern retailers in the run up to Christmas.
However, politics including the likely shape of Brexit as well as the new US administration is determining the direction of the euro, sterling and the dollar for the present, he said.
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