Dow Jones beats expectations and leaves European indices in the dust

Dow Jones beats expectations and leaves European indices in the dust

I can already picture the excited hand gestures from POTUS Donald Trump as he lauds the Dow Jones success story on Thursday. The index hit 29,200 points, beating the record set the day before and exceeding the 29,100 projection set by analysts before trading began.

This followed yesterday’s completion of phase one of the US-China trade deal, which, although very expected, was an opportunity for the US to blow its own trumpet.

The real challenge now will be seeing whether either the US or China will have the appetite for further negotiations, and the potential for more substantive – rather than superficial – terms. For now, though, President Trump will enjoy his victory lap, and milk phase one for all it’s worth.

Unfortunately, European equities couldn’t match the excitedness of their peers over the pond. One of the sad cases was the FTSE, doubling back on its modest early gains on account of poor company news, a stronger Pound and corporate updates.

Speaking on the Dow Jones and other movements on Thursday, Spreadex Financial Analyst Connor Campbell stated,

“Flaws be damned! The Dow Jones decided to keep celebrating the signing of the US-China ‘phase one’ trade deal, with momentum firmly on the index’s side. The same couldn’t be said for its European peers, however.”

“Additionally bolstered by a strong core retail sales figure – jumping from 0.0% to 0.7% month-on-month as the regular reading remained unchanged at 0.3% – the Dow added 165 points after the bell. That allowed it to strike 29200 for the first time in its history, sparking ripples of excitement that it could well reach 30000 before the month is out (Trump permitting, perhaps).”

“Normally Europe takes its cue from the US. However, investors across the pond just couldn’t muster the same level of enthusiasm. The DAX nudged 0.1% higher, continuing to lurk between 13400 and 13450, while the CAC added a handful of points.”

“The FTSE actually went into reverse, dropping half but just about clinging onto 7600. Part of the problem was that the pound’s rebound gathered strength as the session went on. A 0.2% against the dollar put cable at $1.305, while a 0.4% increase against the euro left sterling above €1.172. This as Swedish foreign minister Ann Linde claimed Britain and the EU could reach some kind of trade deal before the end of 2020.”

“Adding to the FTSE’s misery was a raft of weak corporate update. Chief among the losers was Pearson (LON:PSON), which plunged nearly 9% after it warned operating profits would fall once again in 2020. Whitbread (LON:WTB) was also on the losers pile, dropping 5% thanks to regional weakness at Premier Inn. At least Associated British Foods softened the blow to the UK index, climbing 5% thanks to a decent showing at Primark (LON:ABF) and a sweet performance from its Sugar division.”